By removing the ‘guaranteed buyback’ scheme from the New Urea Investment Policy, the government has managed to trim the list of applicants interested in setting up urea plants in the country.
From a bunch of nearly 20 applicants who wanted to set up new plants, the government has shortlisted five ‘serious’ players including Rashtriya Chemicals and Fertilisers, Chambhal Fertilisers, Indo-Gulf, and Nagarjuna Fertilisers and the FCI’s Talcher unit.
These five names will now be submitted to the Cabinet for ratification, sources in fertiliser ministry said.
As per the buyback scheme, the government would lift the entire urea stocks of the fertiliser firms in case no other buyer is found by them.
The guaranteed buyback scheme was to be made available to units for a period of eight years from the date of start of production under the new policy. The assurance has now been removed.
?The New Urea Investment Policy 2013 proposes to do away with the ?guaranteed buyback? scheme to weed out ‘non-serious’ players so as to prevent excess urea capacity addition. The shortlisted names will be taken before the Cabinet soon,? a senior official said.
The government, however, will continue to extend subsidy for the sale of urea produced from the units that come up under the new policy, officials said.
The government had set a cap of 31 million standard cubic metres a day (mmscmd) on domestic gas supply to fertiliser companies.
This has cast a shadow on the future of upcoming urea projects. The government has decided that during next three years 2013-14, 2014-15 and 2015-16, all additional domestic gas would be allotted to the power sector to help improve generation.
An empowered group of ministers (EGoM) would review the gas production and allocation scenario after 2015-16.
India is import-dependent for both urea and non-urea complexes.
In 2012-13, India imported around 8 million tonnes of urea. The present domestic urea production is about 22 million tonnes, while the consumption is pegged at 29 million tonnes.
The limited availability of domestic gas has also led urea players to depend on expensive imported gas for production.
