Under the present RPS, each fertiliser unit is given a unit-wise retention price and the cost of production is fully compensated through a 12 per cent return on capital investment. The new scheme would also take into account the feedstock used by the urea plant. Thus, for a gas-based urea plant, the subsidy would be different from that of a naphtha-based plant.

``This policy, which is said to be under consideration, is expected to be announced in the coming budget. There will be a reduction in subsidy and government will move unit-wise to feedstock apply-wise. The government is considering a proposal in which the present retention price will be changed and it will be retention price based on feedstock apply,'' sources said.

However, industry observers feel the new policy may hurt some units. According to the Expenditure Reforms Commission (ERC), there will be uniform concession within each of the five groups ie. pre-1992 gas-based plants, post-1992 gas-based plants, naphtha-based plants, fuel oil/LSHS based plants and plants on mixed feed.