Sops for fertiliser units moving to natural gas

The government today approved a policy to offer compensation to urea plants running on other fuels for conversion into gas-based units.

"The new policy provides for a special fixed cost towards reimbursement of the cost of conversion to the urea unit after its conversion to the gas is completed," Home Minister P Chidambaram said, briefing about decisions taken at the meeting of the Cabinet Committee of Economic Affairs (CCEA).

The conversion of such units will increase the efficiency of urea output and add to the use of natural gas, which is the most efficient and a cleaner fuel for the production of urea, Chidambaram explained.

The government has also approved to provide some leeway to restart naphtha-based facilities if they take to gas as the feedstock before March next year.

"It (CCEA) has also approved restart of existing naphtha-based units, which are under shutdown, on naphtha, provided they convert to gas before March 2010, as is necessary for other operational naphtha-based units," the minister said.

The CCEA has also given its go-ahead for a special dispensation under the new pricing scheme to restart urea output from the Trombay-V unit of the Rashtriya Chemicals Ltd, which has remained closed for over four years.

"The restart of RCF Trombay will add to indigenous production of urea and reduce import dependence towards meeting the requirement of urea in the country," Chidambaram said.

All the decisions have been taken to boost domestic urea production and add efficiency in output, he added.