JOIN USThe Central government on Tuesday decided to supply gas at uniform delivered price to all fertiliser plants on the gas grid for production of urea through a pooling mechanism—a major policy intervention.
The Cabinet Committee on Economic Affairs (CCEA), at a meeting chaired by Prime Minister Narendra Modi, approved a proposal to pool or average out prices of domestic natural gas and imported liquefied natural gas (LNG) used by fertiliser plants to make the cost of the fuel uniform and affordable.
It is expected that the cost of production of urea at pooled prices will be less than the price of imported urea, which will encourage existing urea units to produce beyond their reassessed capacity, said an official statement.
The increase in urea manufacturing capacity will also contribute to the “Make in India” initiative. Fertiliser plants consume about 42.25 million standard cubic metres per day (mmscmd) of gas for manufacture of subsidised urea. Of this, 26.50 mmscmd comes from domestic fields and the rest is imported LNG. At $5.18 per million metric British thermal unit, domestic gas is about half the cost of LNG.
Briefing reporters about the decision, Telecom Minister Ravi Shankar Prasad said gas pooling would help save Rs 1,550 crore in subsidy and benefit the 30 urea-producing units in the country, of which 27 are gas-based and three run on naphtha.