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Urea policy approved: Net impact on industry at Rs 1,033 cr

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The Government has so far mopped up a total of Rs 1,374 crore as a result of the interim revision in capacity utilisation and energy consumption norms

NEW DELHI, May 16

THE Government today approved the policy parameters and norms for determination of final retention prices payable to individual urea manufacturing units for the 7th and 8th pricing periods, extending from July 1, 1997 to March 31, 2000 and April 1, 2000 to March 31, 2003, respectively.

The implementation of the policy proposals, approved at the meeting of the Cabinet Committee on Economic Affairs (CCEA) here, would result in the industry forking out a net sum of Rs 1,033 crore to the Government on account of drawal of excess subsidy.

"The net figure includes the impact of recoveries already made from individual units," the Secretary, Department of Fertilisers, Mr Nripendra Mishra, told newspersons.

The Government has so far mopped up a total of Rs 1,374 crore as a result of the interim revision in capacity utilisation and energy consumption norms. Of this, the revision in capacity utilisation norms for computing retention price (effected in May 2000) accounted for Rs 461 crore, with the revision in energy consumption norms (effected in November 2001) making up the rest."Apart from this, there would be estimated additional recoveries of Rs 1,833 crore resulting from the decision approved today, such as the gradual phase-out of allowances based on plant vintage. But on the other hand, there would be outgo worth Rs 2,145 crore from the Government to the industry on account of units undertaking capital additions during the 7th and 8th pricing periods, besides updation of costs incurred on wages and salaries, utilities, insurance, selling expenses, etc.," Mr Mishra said.

All put together, the net impact on the industry would be around Rs 1,033 crore. "All these are preliminary estimates," Mr Mishra added.

The policy proposals approved by the CCEA are based on the recommendations of the Group of Ministers constituted in early-March 2002. "It would now set the stage for the implementation of major reforms in the fertiliser sector in the background of recommendations by the Expenditure Reforms Commission," Mr Mishra stated.

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