Cabinet to take up changes to urea pricing policy

The cabinet committee on economic affairs (CCEA) will consider amending the New Pricing Scheme (NPS) III to determine the quantum of subsidy to be paid for indigenous urea.

Earlier, when the government had introduced the Nutrient Based Subsidy (NBS) Scheme for Nitrogen (N), Phosphorous (P) and Potassium (K) fertilisers, under which their prices were decontrolled, it had decided to include urea into the policy in a phased manner.

“Urea will not be included under the NBS policy for now. We might do it in the next fiscal. For the current fiscal we have made changes to NPS-III, which is waiting for cabinet approval,” said an official from Department of Fertilisers.

The government has dropped the plan to introduce NPS-IV that might have had an additional subsidy requirement, the official said.

Under the NBS policy, subsidy for indigenous and imported P&K fertilisers have been announced on an annual basis for 2010-11 based on the prevailing fertiliser prices and price trends in the international market. Subsidy for indigenous urea is provided based on NPS-III.

However, the industry is miffed with the government’s decision and believes it was high time that the government should have brought urea under the ambit of NBS in order to promote balanced fertilization and decanalise its imports.

“The NBS was meant to promote all fertilisers. By keeping urea out of the policy only adds to the confusion. The government should at least lay down a roadmap for urea with separate subsidy levels for gas-based urea plants, naphtha-based and fuel-based plants. This would also help in reducing the subsidy burden of the government,” said Satish Chander, director general, Fertiliser Association of India (FAI).

He said if urea is included urea in the NBS policy, more players would come into the sector and subsequently that would create a market where urea will be competitively priced and sufficient available.