Gas supply from KG basin to cut fertilizer subsidy

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Posted: Thursday, Jul 02, 2009 at 1856 hrs IST
Updated: Thursday, Jul 02, 2009 at 1856 hrs IST

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New Delhi: The government on Thursday said that natural gas from Reliance Industries’ Krishna-Godavari basin fields will help cut fertiliser subsidy by about Rs 3,000 crore in 2009-10 fiscal.

“This (D6 field of RIL) has led to substitution of naphtha by natural gas in gas-based urea units, leading to an expected savings in subsidy of approximately Rs 3,000 crore in 2009-10,” Minister of State for Chemicals and Fertilisers Raghuvansh Prasad Singh told the Lok Sabha on Thursday.

The fertiliser sector has been given the highest priority in allocation of natural gas from KG basin and the existing shortfall in supply of gas to urea units has been completely met from here, he said.

Fifteen urea manufacturing units have been allocated 14.97 million standard cubic metres per day of gas from RIL’s D6 fields.

Citing reasons for rising fertiliser subsidy, Singh said, “The increase in expenditure on subsidy is mainly due to the increase in international prices of fertiliser inputs and finished fertilisers over the last few years.”

According to data submitted to Parliament, the government’s expenditure on fertiliser has increased more than two-fold to Rs 99,494.71 crore during 2008-09 compared with Rs 43,319.16 crore in last year.

In the current year, the estimated requirement of fertiliser subsidy has been assessed at Rs 77,425.19 crore, Singh noted.

The government, however, has taken steps to improve efficiency of production and reduce subsidy outgo, he said, adding that it is encouraging Indian companies to invest in joint venture projects in fertiliser sector abroad and also the conversion of non-gas based units to gas.

Under the current fertiliser subsidy regime, farmers are getting inputs at subsidised rates, which are much below the production and import cost, he added.

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