Press Information Bureau

Government of India

Ministry of Chemicals and Fertilizers

08-January-2013 15:1 IST

Year End Review 2012

Urea Policy

New Investment Policy-2012

The Department of Fertilizers has notified New Investment Policy- 2012 on 2^nd January, 2013 in order to facilitate fresh investment in urea sector. It is expected that the demand of urea in the country by the end of 12^th Five Year Plan will be around 360 lakh MT. With the approval of this policy, it is expected that nearly 100 lakh MT of additional urea capacity will be added in the country to an already existing indigenous capacity of 220 LMT and 20 LMT from OMIFCO Oman, with an investment of nearly Rs. 35,000 crores during 12^th Five Year Plan period (2012-17). This will make country self-reliant in urea by end of 12^th Five Year Plan.

Fertilizer Subsidy in P&K fertilizers

With a view to ensure balanced use of fertilizers and to promote investment in fertilizer sector, the Department of Fertilizers is implementing the Nutrient Based Subsidy (NBS) Policy for decontrolled Phosphatic & Potassic (P&K) Fertilizers w.e.f. 1.4.2010. Under the NBS policy, a fixed rate of subsidy (in Rs. per Kg. basis) decided on annual basis is provided to each grade of subsidized P&K fertilizers depending upon its nutrient content. Any variant of the fertilizers under the NBS fortified with micronutrient Boron and Zinc, as provided under the FCO, is eligible for a separate additional fixed subsidy. Under the Policy the prices are allowed to be fixed by the fertilizer companies at reasonable level.

At present 21 grades of P&K fertilizers, namely, DAP, MAP, TSP, MOP, Ammonium Sulphate, SSP and 15 grade of NPKS complex fertilizers are covered under the NBS Policy. The subsidized fertilizers are allowed for use in manufacturing of mixture and customised fertilizers. With the implementation of NBS for P&K fertilizers, the availability of the fertilizers during the last three years has been in plenty.

Revival of the closed units of HFCL and FCIL

There are five closed units of Fertilizer Corporation of India Ltd (FCIL) at Sindri, Talcher, Ramagundam, Gorakhpur & Kobra and three closed units of Hindustan Fertilizer Corporation Ltd. (HFCL) at Durgapur, Haldia and Barauni.

The cabinet had in 2008 approved revival of FCIL and HFCL units subject to non-recourse to Government funding and to consider write off of GoI Loan and interest to the extent required, subject to submission of fully tied up proposals for final decision on waiver and constitution of an ECOS. The ECOS recommended revival of Sindri, Talcher and Ramagundam Units of FCIL on ‘nomination basis’ by the nominated PSUs and Gorakhpur & Kobra units of FCIL and Durgapur, Haldia, Barauni of HFCL through bidding route. Cabinet Committee on Economic Affairs (CCEA) in 2011 approved the recommendations of ECOS with the stipulation that Board for Industrial and Financial Reconstruction (BIFR) proceedings be expedited and thereafter, the matter including changes, if any, required in bid parameters, be placed before the Committee for a final decision.

The matter is in the BIFR. The BIFR has taken up the matter on priority basis and held many hearings. In a recent hearing, BIFR suggested that the revival on nomination is not as per BIFR rules and even floating of EOI for revival through bidding route has to go through BIFR procedure which are time taking and the whole process may get stuck up in the procedural issues. BIFR suggested that Government should look for suitable option of taking the companies out of the purview of BIFR. A meeting of ECOS is being convened shortly for getting their recommendation on the matter and further submission to CCEA.

Movement and Distribution of Fertilizers  

The cumulative availability and Sales of Urea during the year 2012 (April’12 to December’12) is 224.78 LMT and 220.03 LMT respectively as compared to corresponding period April’11 to December’11 was 221.10 LMT and 218.79 LMT respectively, and there is no shortage of DAP, MOP and NPK in the country.

Implementation of e- Office

The Department is in the process of implementing e-Office in all its divisions and Subordinate Offices. With the implementation of e-Office, the physical movement of office files/papers in some of the divisions has shown decreasing trend.

Direct Transfer of subsidy Project

Currently, the direct transfer of subsidy is in the 1^st stage of implementation wherein the fertilizer movement from the production/import to the retailers which is the last point of sales to the farmer is available on the transparency portal www.mfms.nic.in. Movement till the district level can be viewed on urvarak co.in. With this, availability of fertilizers to the farmer is ensured.

In next stage, the sale of subsidized fertilizers from retailers to farmers will be captured on real time basis. In this phase, the identity of farmers, linked to Aadhar enabled core banking account, will also be captured.  This phase will be implemented in 11 districts across the country on pilot basis. After successful implementation of this phase, the same will be rolled out in other districts wherever Aadhar penetration is more than 90%. Simultaneously, cash transfer to farmers would also be done in same 11 districts after successful implementation of the pilots to track sale of fertilizers to farmers in these districts.

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NSK/DB

Nutrient Based Subsidy policy strengthens fertilizer subsidy targeting and market pricing, paired with investment and direct transfer reforms. The Department adopted a New Investment Policy-2012 to expand urea capacity and implemented the Nutrient Based Subsidy (NBS) for P&K fertilizers providing fixed per kg subsidies by grade with additional support for micronutrient fortification; revival of closed HFCL/FCIL units is pursued subject to BIFR procedures and Cabinet review, while transparency and subsidy targeting are being advanced through e Office measures and a piloted Direct Transfer of subsidy system linking retailer sales and Aadhaar enabled bank accounts.