Decision on Urea to Cost Government Rs 900 Crore - The New Indian Express

Decision on Urea to Cost Government Rs 900 Crore

Published: 01st March 2014 06:00 AM

Last Updated: 01st March 2014 01:25 AM

The Cabinet Committee on Economic Affairs’ decision to  hike the fixed cost of urea, as suggested by the Group of Ministers, by up to Rs 350 per tonne will inflate government’s subsidy bill by about Rs 900 crore.

To encourage new investments in the urea sector, CCEA also approved changes in the New Investment Policy and removed the “guaranteed buyback” clause and included a provision of bank guarantee of Rs 300 crore from companies.

The minimum fixed cost, including the hike, should be Rs 2,300 per tonnes under the New Pricing Scheme (NPS) III.

In the case of factories that are more than 30 years older, they will be given additional Rs 150 per tonne.

The CCEA cleared amendments in the New Investment Policy, by dropping the ‘guaranteed buyback’ provision, which will assure buyback of urea for eight years from start of production.

Urea production in the country is stagnant at 22 million tonnes and the gap of 8 million tonnes is met through imports. So far, about 4 million tonnes of urea has been imported.

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