Fertilizer Min seeks Rs 12,500 cr for paying urea subsidy

Due to lack of funds the ministry has not been able to make payments to domestic urea manufacturers since August 2014

Faced with liquidity crunch to clear urea subsidy bills, the Fertilizer Ministry has sought about Rs 12,500 crore from the Finance Ministry for making subsidy payments to domestic manufacturers.

The Fertiliser Ministry has not been able to make payments to domestic urea manufacturers since August 2014 as funds allocated in the Budget have been exhausted, sources said.

It has not allocated additional funds for indigenous urea in the supplementary grants, they added.

"Fertilizer Ministry has approached the Finance Ministry for seeking funds of about Rs 12,500 crore to clear pending subsidy bills," said a source.

The government had allocated Rs 72,970.30 crore in the Union Budget 2014-15 for fertiliser subsidy.

Of this, Rs 12,300 crore was meant for imported urea, Rs 36,000 crore for domestic urea and the rest Rs 24,670.30 crore for sale of partially de-controlled fertilisers (like phosphatic & potassic fertilisers).

Urea is provided to farmers at a fixed subsidised maximum retail price (MRP) of Rs 5,360 per tonne. The difference between the cost of production and MRP of urea is provided as subsidy to manufacturers.

During financial year 2013-14, the cost of production of per tonne of urea from each of the naptha based units was more than Rs 43,000, while in case of units using domestic gas as feedstock the price hovers in between Rs 10,000-Rs 18,000 per tonne.

Meanwhile sources added that at present there are adequate funds for making subsidy payments for phosphatic & potassic fertilisers as the subsidy on them is fixed.