The Cabinet Committee on Economic Affairs (CCEA) today cleared a new policy to promote fresh investments for manufacturing urea. The policy will allow fertiliser companies to charge more for the urea that is produced from such additional facilities.
The key provision of the policy is that the urea produced from capacity additions due to revamp of existing units within four years from the present can carry a price tag that is equal to 85 per cent of the international parity price (IPP) at that time. However, there will also be a floor and ceiling price of $250 per metric tonne (MT) and $425 per MT, respectively.
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The policy, based on the recommendations of the Abhijit Sen committee some months back, also allows companies to charge 90 per cent of the IPP with a floor and ceiling price of $250 per MT for urea produced from expansion of existing units within five years from now.
The ailing public sector units of Fertiliser Corporation of India and Hindustan Fertiliser Corporation can even charge 95 per cent of the IPP for urea produced from their revived units.
In the case of greenfield projects, the price will be fixed through a bidding route with a percentage discount over the IPP and with appropriate floor and ceiling prices, which will be worked out by the Department of Fertilisers on the basis of prevailing gas prices.
Further, the coal gas-based urea projects will be treated on a par with brownfield or greenfield projects to encourage use of indigenously-available coal. The CCEA also approved the Sen committee’s recommendations for joint venture companies abroad.
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The CCEA also approved Rs 200 crore investment for exploring uranium, used as a fuel to produce electricity from nuclear power plants.
Of the investment approved, Rs 120 crore will be disbursed in the Eleventh Plan (2007-2012) period and Rs 80 crore in the Twelfth Plan period.