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New urea
policy
·
On August 8,
2008 CCEA
approved a
new policy
for
investments
in the urea
sector and
long-term
offtake of
this
fertiliser
from joint
venture
projects
abroad. (as
per the
recommendations
of the
Abhijit Sen
Committee
report)
·
The policy
aims to
encourage
investments
in urea
sector,
bring about
savings in
subsidies,
apart from
increasing
use of
indigenously
available
resources of
coal and
making
available
urea at
competitive
prices.
Mission
IAS’2009
·
On the face
of it this
policy is
moving
towards
benchmarking
urea to the
import
parity
price.
The
cost-plus
concept
is being
given a
go-by and
import
parity price
(IPP) is
being
implemented.
·
The
additional
urea from
the revamp
of existing
units will
be
recognised
at 85 per
cent of IPP
with the
floor and
ceiling
price of
$250 per
tonne and
$425 per
tonne,
respectively.
·
The urea
from the
expansion of
existing
units,
within five
years of
notification,
will be
recognised
at 90 pc of
IPP with the
floor being
$250 per
tonne.
·
This is
intended to
encourage
investments
in urea
sector,
besides
efficiency
of subsidy
due to
import
substitution
at prices
below IPP.
·
Minister for
science and
technology,
Kapil Sibal,
said the
urea from
the revived
units of
HFCL and
FCIL, within
five years
of
notification,
will be
recognised
at 95 per
cent of IPP
with a floor
and ceiling
price.
·
To encourage
use of
indigenously
available
coal
resources,
the coal
gasification-based
urea
projects
would be
treated at
par with a
brownfield
or a
greenfield
project, as
the case may
be
·
According to
the policy,
the joint
venture
projects
abroad will
be
encouraged
through firm
offtake
contracts
with pricing
decided on
the basis of
prevailing
market
conditions
and in
mutual
consultation
with the
joint
venture
company in
accordance
with the
pricing
principle
recommended
by the Sen
Committee.
·
Industry
sources add
that the
government
has gone
totally
wrong on
fixing the
cap on urea
price of
$425 per
tonne, while
in the
international
market it is
about $800
C&F for
India.
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