The new pricing
policy for urea units, scheduled to come into effect from 1.4.2003,
has been formulated with the objective of encouraging efficiency
based fertilizer pricing. The new scheme will be implemented
in stages. Stage-I would be of one year duration, from 1.4.2003
to 31.3.2004. Stage-II would be of two years duration from 1.4.2004
to 31.3.2006. The modalities of the subsequent stages would
be decided after review of the implementation of the Scheme
during the Stage-I and Stage-II.
Under the new
pricing policy, the existing urea units shall be given a concession
which may be at the group concession rate or actual of the unit
if it is lower than the group concession rate. In such scenario,
the urea units having low efficiency levels face the challenge
of revamping their manufacturing efficiency. The outliers whose
existing retention prices will be higher than the group concession
rate by 20 per cent are to be granted an adjustment phase of
one year during Stage-I. In this Stage, such outlier units will
get rate of concession based upon group weighted average (excluding
outliers) and a structural adjustment which will be 50 per cent
of the difference between their respective retention price and
the group weighted average excluding outliers.
The financial
impact on different units will depend upon their levels of operational
efficiency. It is expected that at the end of this adjustment
phase of one year, the inefficient outlier urea units will be
able to attain efficiency levels of their respective groups.
The new scheme
aims at greater transparency, uniformity and efficiency in subsidy
disbursements to urea units and will induce urea manufacturing
units to take cost reduction measures and be competitive.
This information
was given by the Minister of State for Chemicals & fertilizers,
Dr. Chhattra Pal Singh, in a written reply to a question in
the Rajya Sabha today.
