The Election Commission has approved notification of New Urea Pricing Scheme (NPS), but it has asked the ministry to defer notification of New Urea Investment Policy (NIP) till elections are over.
According to sources, the Fertiliser Ministry has written to the Election Commission for reconsideration of its decision as the policy was cleared by the government in 2011 and it had been notified in 2012.
In February this year, the CCEA had approved amendments to NIP 2012 for setting new or expansion of urea plans and New Pricing Scheme III (NPS) for calculation the cost of production for urea. The Commission has approved notification of NPS, but it has asked the ministry to defer notification of NIP.
The NIP policy was notified in January last year to incentivise firms to invest in the urea sector and reduce dependence on imports.
The Fertiliser Ministry had proposed to drop ‘guaranteed buyback’ provision in the NIP, which assures buyback of urea for eight years from start of production.
The ‘guaranteed buyback’ provision had to be amended in the policy as government had received 13 investment proposals entailing capacity addition of 16 million tonne mainly due to this clause.
The proposed capacity addition by applicants was more than double the actual requirement, forcing the Fertiliser Ministry to have a second thought on this clause.
Other changes in the policy include insertion of a provision of bank guarantee of Rs. 300 crore from companies keen to set urea plants under this policy. Government will provide subsidy on sale of urea produced from the new plants.
Urea production in the country is stagnant at 22 million tonnes and the gap of 8 million tonnes is met through imports.
So far, about 4 million tonnes of urea has been imported.