Category: The Economic Times

The urea investment policy quagmire

The urea investment policy (UIP) recently approved by the Cabinet based on EGoM recommendations assures investors in a ‘Greenfield’ project prices linked to the import-parity price, or IMPP, with a range of $305-335 per tonne corresponding to gas price $6.50 per mmBtu. So, for each $1 increase in gas price beyond $6.50 per mmBtu, compensation to the manufacturer increases by $20 per tonne. Thus, for a gas price of $14 per mmBtu, the manufacturer would get $485 per tonne on the higher end of the range. Based on such tempting numbers, firms have reportedly drawn up plans for setting up urea capacity totalling around 20 million tonnes 12 million tonnes more than the current deficit of eight million tonnes. If...
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