The government plans to review the New Investment Policy of 2008 in order to overhaul the production of the urea sector by attracting more investments and reviving the sick fertiliser units.
The draft policy, being prepared by the Department of Fertilisers, will soon be up for an inter-ministerial discussion.
While the government has shelved the idea of including urea under the Nutrient Based Subsidy (NBS) scheme, it is now primarily focused into reducing the dependence on its imports. The policy was brought out in 2008 but it has failed to attract any investments in urea at all.
“A review of the New Investment Policy is under consideration. It is being finalised for an inter-ministerial discussion. By the middle of November, it should be ready and would be sent to the Cabinet for approval,” Fertilisers Secretary Sutanu Behuria told Business Standard.
Behuria also said the new policy would look into extending some incentives for attracting more and more investments into the existing urea plants which would go for technical upgrade and produce more than their capacity. It would also provide additional benefits for reviving the sick units under the Fertiliser Corporation of India (FCI) and Hindustan Fertiliser Corp Ltd.
He added that by 2013 all urea plants would be converted to gas-based units and total gas required for the conversion is around 40-45 mscmd. “We have got long-term commitment from the Ministry of Petroleum and we are also in talks with GAIL for greater availability of gas. Besides, we would also import liquefied natural gas, which would still be cheaper than naptha or fuel,” Behuria said.
The government was also looking at coal gasification for the units, he said.
Currently, there are three types of urea plants — gas-based, naptha-based and fuel-based. In 2009-10, about 21 million tonnes of urea was produced, while about five million tonnes was imported. Domestic production of urea increased by six per cent in 2009-2010 to 21.12 million tonnes (mt) from 19.92 mt in 2008-09.
Between April and June, the sale of urea jumped by 13.5 per cent to 4.69 mt from 4.13 mt in the same period last year. Urea is the most consumed fertiliser in the country, followed by di-ammonium phosphate and other complex fertilisers.
On February 18, the government had increased the prices of urea by 10 per cent from Rs 4,830 to Rs 5,310 a tonne, which was effective from April 1. The revenue foregone towards the fertiliser subsidy payout in 2009-10 was Rs 8,010 crore, which was 3.22 per cent of the total revenue forgone compared to 6.3 per cent in 2008-09 which amounted to Rs 14,200 crore.
