Cabinet approves gas pooling facility for fertiliser plants

 Sanjeev Sharma

New Delhi, March 31

To woo farmers in the poll-bound states of Uttar Pradesh and Bihar amid the row over Land Acquisition Bill, the Cabinet Committee on Economic Affairs (CCEA) today approved gas pooling for fertiliser plants to enhance domestic production. Besides this, the Cabinet also decided to advance the setting up of a gas pipeline between Jagdishpur and Haldia to provide piped gas to the eastern region, revival of Gorakhpur and Barauni fertiliser units and allocate Rs 4,948 crore for the creation of strategic crude oil reserves.

The CCEA chaired by Prime Minister Narendra Modi approved a major policy intervention to supply gas at uniform delivered price to all fertiliser plants on the gas grid for production of urea through a pooling mechanism.

It is expected that the cost of production of urea at pooled price would be less than the price of imported urea, which will encourage the existing urea units to produce beyond their reassessed capacity. 

This reform measure is also expected to augment indigenous manufacturing capacities. It is expected to help in reviving the Gorakhpur, Barauni and Sindri urea plants. These three urea plants will serve as the anchor load customers for Jagdishpur-Haldia pipeline. As a result, work on this pipeline which was approved in 2007 is expected to start in this financial year.

The need for this intervention arose because, at present, the price of gas supplied to fertiliser units varies from plant to plant depending upon the combination of domestic gas and Regasified Liquefied Natural Gas (RLNG). Hence, there is no uniformity in input price.

The CCEA also approved the allocation of Rs 4,948 crore for Gross Budgetary Support (GBS) to the scheme for strategic crude oil reserves.

Keeping in view India’s high import dependence on oil and in the interest of the country’s energy security objectives, the Government has taken up construction of three crude oil reserves totalling 5.33 million tonne. These are located at Visakhapatnam, Mangalore and Padur.

The Cabinet also approved the revival of closed Barauni unit of the Hindustan Fertilizer Corporation Ltd. and Gorakhpur Fertilizer Unit of Fertilizers Corporation India Limited.