The chemicals and fertilisers ministry is likely to introduce a reverse-bidding process for setting up greenfield urea plants.
Under the new regime, aimed at rationalisation of the burgeoning fertiliser subsidy, the government will invite global tenders from companies interested to set up plants on identified lands in agriculture heartland. The company, which quotes the lowest urea price, will be given priority on agreed terms and introduce an element of certainty about the projects? size, sources in DoF told FE.
These units will be provided gas at reasonable cost, which will be a pass-through feature.
Similarly, traders may also be allowed to participate in the bidding system, provided they guarantee assured supply on agreed terms.
A draft note has already been circulated among the stakeholders in this regard.
?The formula is a key component of the proposed investment policy, to be announced soon, on which subsidy for the plant will be decided,? confirmed a senior DoF official.
Under the new investment policy, the government plans to bring in an investment of about Rs 30,000 crore, he said.
This kind of investments can add an additional 10 million tonne per annum urea domestically, reducing dependence on imports substantially.
The moves is significant, as the country will import about 6 million tonne urea this year and the Planning Commission projects an increase of 30 million tonne in the domestic capacity by the end of the 11th Plan period, from the existing 20 million tonne.
But industry sources differ on this. ?Although, this appears a logical way to fix the subsidy burden on the government, it does not take into account the fact that the fertiliser units will not be equipped with long -term feedstock supply to be able to make such a bid,? they say.
