NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the continuation of production of urea from Madras Fertilizers Limited, Mangalore Chemical and Fertilizers Limited and Southern Petrochemicals Industries Corporation -Thoothukudi using naphtha as feedstock till availability of gas through gas pipeline or by any other means.
“If these three units would have been closed, then the entire requirement of the Southern region would have had to be sourced mainly through imports,” the Cabinet said in a statement.
There are only two urea units at Kakinada in the entire Southern region other than these three units.
“These three naphtha-based urea units with an annual capacity of 14.88 lakh metric tonne will cater to the demand in the southern states of Karnataka, Tamil Nadu and Kerala (around 22.5 lakh MT per annum) throughout the year,” the statement said.
Under the Modified New Pricing Scheme (NPS)-III, the three units — MFL-Manali, MCFL-Mangalore and SPIC-Thoothukudi — were allowed to produce urea from naphtha as feedstock till June 30 last year, which was later extended twice by the Cabinet to April 16 this year.
On the basis of NPS-III, the total cost of production of urea or concession price is calculated while the selling price is fixed at Rs 5,360 per tonne.
In 2013-14, the cost of production of urea per tonne from each of these units was more than Rs 43,000 while in the case of units using domestic gas as feedstock, it hovered between Rs 10,000 and Rs 18,000 per tonne.