Poll panel approves urea pricing, defers investment policy

April 11, 2014 07:07 pm | Updated May 21, 2016 10:35 am IST - New Delhi

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.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.