Government approves continuation of urea production from Naptha

The Union Government has given nod to continuation of production of urea from three plants using Naptha as raw material for duration of three months ending on September 30, 2014. This decision will enable these units to continue urea production for the next 3 months and help cater to the requirement of urea for Indian farmers in the ongoing kharif season.

In line with the modified New Pricing Scheme (NPS)-III, the 3 naphtha based units- MFL-Manali, MCFL-Mangalore and SPIC-Tuticorin – were permitted to produce urea from naphtha as feedstock till June 30, 2014. The Centre had directed these units to switch to natural gas otherwise subsidy would not be provided. However, these fertilizer firms could not to shift to gas from naphtha, as there were protests from farmers in Tamil Nadu who were against the laying of gas pipeline. Also, gas was not available.

The total cost of production of urea or (concession price) is calculated on the basis of NPS-III. The selling price of urea is fixed at Rs 5,360 per tonne. Of the three firms, the MFL is state owned, while other two MCFL and SPIC are private companies.

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