The proposal was cleared last year by the Cabinet Committee on economic affairs, and is exempt from the government's decision to freeze new capacity creation up to 2002, when it will get a detailed report on demand-supply.The projects, to be funded through public investments, will come up in Thal in Maharashtra, Hajira in Gujarat and Gorakhpur in Uttar Pradesh and Nellore in Andhra Pradesh.

"Normally it takes about 36 months for projects like these to come up but we will bring up these projects pretty fast as the industry needs it to meet the demands till 2007," he said.

The minister was addressing the 73rd annual session of the Indian Chamber of Commerce here on Saturday.

Prabhu said his ministry has also set up a six-member multi-disciplinary committee to study the feasibility of setting up seven comprehensive chemical estates in as many number of coastal states in India including West Bengal.

The project cost will be about $8 billion which will be funded entirely through foreign direct investment, Prabhu noted.

"We have approached foreign companies with the proposal and they are very keen to fund the project," the minister said. Talking about the aberrations that have crept into the retention pricing scheme notified by the government in 1977, Prabhu said, "Our ministry is talking to different stakeholders in the metropolitan cities to formulate a draft fertiliser policy."

Liberalisation of the fertiliser has been proposed since Aug 1992, in line with the rest of the Indian economy. The government has finally decided to decontrol the sector, but will do so in phases.

On the government's stated preference for expansion of existing units over the creation of new plants, the minister said: "The brownfield projects will soon be disclosed by the government."

"There are a large number of sick fertiliser units in the east and it is very important that some development takes place here. We have to find ways to revive the units here. The government has prepared a white paper on these units," he said.