The Hindu : New norms for urea pricing

Online edition of India's National Newspaper
Friday, Feb 14, 2003

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Business

New norms for urea pricing

By Our Special Correspondent

NEW DELHI FEB. 13 . The new urea pricing policy for the industry that is to come into effect from April 1 this year is expected to bring in greater transparency, uniformity and efficiency in subsidy payments to fertilizer manufacturing companies. It will encourage them to take measures on their own to promote efficiency and reduce production costs, according to the Minister of State for Chemicals and Fertilizers, Chhatrapal Singh.

Addressing the Parliamentary Consultative Committee attached to his Ministry, he said the new scheme would be implemented in three stages.

The first stage would be from April 1 to March 31, 2004 with the second stage being of two years duration from April 1, 2004 to March 31, 2006. The modalities of stage III would be decided after reviewing implementation of the earlier two stages.

On the new pricing policy, he said there would be six groups based on vintage and feedstock for determining the group based concession under the new scheme.

These would comprise pre-1992 gas based units, post-1992 gas based units, pre-1992 naphtha based units, post-1992 naphtha based units, fuel oil or low sulphur heavy stock based units and mixed energy based units.

The mixed energy based units would include gas based units that use alternative feedstock or fuel up to 25 per cent on April 1, 2002.

Mr. Singh said the concession rates would be determined in two steps. In the first, the weighted average retention price and dealer's margin of the units in various groups would be computed as on April 1, 2002. Units having exceptionally high or low retention price with a deviation of 20 per cent would be treated as outliers in their respective groups. In the second step, the final weighted average group retention price after excluding outliers would be computed.

He said after commencement of stage I, there would not be any reimbursement of investment made for improving operations or mopping up of gains due to operational efficiency. Members were also informed that under the new scheme, there would be no capping on production of urea. The use or sale of by products such as ammonia would be permitted in case considered surplus beyond the reassessed capacity for urea production.

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