The government may give Rs 1,300 crore each to four public sector fertiliser plants to help them shift from liquid fuel to gas as the feed stock for production of urea.
These plants are currently using expensive naptha and fuel oil and need additional investment for the conversion.
"Three plants of National Fertilizers Limited (NFL) and one of Gujarat Narmada Valley Fertilizers Company (GNFC) may receive Rs 1,300 crore each for their conversion to gas-based plant," a senior government official said.
Mooted by the Fertiliser Ministry, the proposal will soon be sent to the Public Investment Board for its approval before it is placed before the Cabinet, he added.
Both NFL and GNFC, have already signed the term sheet with public sector utility GAIL for supply of gas and once the Centre clears the Rs 5,200 crore investment, they will sign the agreement, he said.
GNFC's 6.36 lakh tonnes (LT) capacity Bharuch factory, and NFL's Panipat, Bhatinda and Nangal facilties with a capacity of nearly 15 LT, would be the beneficiaries.
The use of expensive naptha has resulted into increased expenditure by the government on subsidy, which was Rs 1,11,000 crore in 2008-09, he noted.
Last year, the production cost of urea was over Rs 20,000 a tonne for the naptha-based plants, while this nitrogen fertiliser is sold at government-fixed price Rs 4,830 a tonne.
