(MENAFN- KNN India) The government on Tuesday approved a proposal to pool the prices of domestic natural gas and imported liquefied natural gas (LNG) and supply them to domestic fertiliser plants at a uniform delivered price. This was announced after the meeting of Cabinet Committee on Economic Affairs, chaired by the Prime Minister Narendra Modi.
It is expected that the cost of production of urea at pooled price would be less than the price of imported urea, which will encourage the existing urea units to produce beyond their reassessed capacity. The increase in urea manufacturing capacity will also contribute to the Make in India initiative.
Briefing reporters about the decisions taken by the Cabinet, Telecom Minister Ravi Shankar Prasad said gas pooling will help save Rs 1,550 crore in subsidy and will benefit 30 urea plants. Out of which 27 units are gas based and three units viz Mangalore Chemicals & Fertilizers Limited (MCFL), Madras Fertilizers Limited (MFL) and Southern Petrochemicals Industries Limited (SPIC) are Naphtha based
This reform measure is also expected to augment indigenous manufacturing capacities. It is expected to help in reviving the Gorakhpur, Barauni and Sindri urea plants. The work on this pipeline which was approved in 2007 is expected to start in this financial year.
Further, the Department of Fertilizer has estimated the saving in subsidy outgo due to revised energy norms of urea units of Rs. 6979 crore by the end of 2018-19.
The need for this intervention arose because, at present, the price of gas supplied to fertilizer units varies from plant to plant depending upon the combination of domestic gas and Regasified Liquefied Natural Gas (RLNG). Hence, there is no uniformity in the input price.
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