The Hindu Business Line : Govt plans to link domestic urea price to that of imports

Mumbai, Jan. 2 The Union Government plans to link domestic price of urea with import price in view of the rising prices of raw material for fertilizer production.

Mr Ram Vilas Paswan, Union Minister for Chemicals and Fertilisers and Steel, announced this at a Rashtriya Chemicals & Fertilizers Ltd (RCF) function on Wednesday.

Mr Paswan said that companies are selling urea at Rs 4,830 per tonne while it was imported at Rs 16,000 per tonne. The Government was giving a subsidy to bridge the price gap. It is an untenable arrangement in view of the rising prices of raw material, he said.

Welcoming the move, Mr U.S. Jha, Chairman and Managing Director of RCF, said that with the linking of prices there would be international benchmarks for urea, he said, and added that price parity would only be applicable for brownfield expansion and new projects.

Mr Jha said that in the last two years, along with crude, prices of another important raw material like sulphur have also increased. From $70 per tonne, sulphur has increased to $400, which is also adding to the subsidy burden, he said.

In view of the increasing demand for fertiliser in the country, the Ministry was also considering more overseas joint ventures. Mr Paswan would be visiting Kuwait in second week of January for exploring new opportunities for the sector.

Since July 2005, Oman India Fertiliser Company SAOC is in operation at Sur Industrial Estate in the Sultanate of Oman. The fertiliser complex plant is owned 50 per cent by Oman Oil Company SAOC, 25 per cent by Indian Farmers Fertiliser Cooperative Ltd and 25 per cent by Krishak Bharati Cooperative Ltd.

The complex is designed to produce 1.652 million tonnes per year of granulated urea and 0.255 million tonnes per year of surplus ammonia using natural gas as feedstock. Both the products are being exported in bulk by ship to India.

Restarting of sick units

Mr Paswan said that Union Government has decided to restart all the eight sick public sector fertiliser units in a move to produce 80 lakh tonnes additional fertiliser to meet the growing demand. The revival of plants would cost up to Rs 24,000 crore. The plants would be based on natural gas for which the Cabinet has given its go ahead, he said.

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