 "Petroleum ministry proposes gas pooling for fertilizer plants")
Of the 30 urea producing plants, 27 are gas-based and three run on naphtha as fuel. In a year, India consumes 30 million tonnes of urea . Between April and December 2014, fertiliser plants consumed 42 million standard cubic metres a day (mscmd) for manufacturing urea. Of this, 26 mscmd comes from domestic fields and 16 mscmd is imported LNG.
The ministry has proposed waiving customs duty on imported LNG for fertiliser plants; granting ‘declared goods’ status for natural gas to allow four per cent central sales tax, instead of state sales tax at differential rates; and waiving service tax on imported LNG that will be pooled.
The steps are expected to reduce the cost of imported LNG by $0.75 a million British thermal units (mBtu). Domestic gas used by fertiliser plants is currently priced at one-third the price of imported LNG. The ministry has sought inter-ministerial consultations on the proposal that would be put up to the Cabinet later for its approval.
As part of the plan, an Empowered Pool Management Committee would be formed with representatives of the ministry of petroleum & natural gas, department of fertilizer, department of expenditure, and GAIL (India). The committee would approve the plant-wise gas supplies to be made under the gas pool mechanism.
The department of fertilizer will also determine the total requirement of natural gas. The ministry has proposed making GAIL the pool operator, to arrange imports after considering domestic availability and averaging both the prices. Officials said the ministry had proposed the mechanism be effective from April 1.
Under the scheme, fertiliser customers will pay suppliers according to existing contracts. The difference between the pooled price declared by GAIL and the actual delivered price paid by fertiliser customers will be paid to a Pool Fund Account or reimbursed from it.