It’s time to leverage the conditions. Freeing distribution and movement will also make a difference Under new pricing guidelines notified in October, 2014, the price of domestic gas was fixed at $5.61 per mBtu on net calorific value (NCV) basis with effect from November 1, 2014 — an increase of 33 per cent over the $4.2 per mBtu prior to that date. The price was applicable till March 31, 2015. The price was arrived at by taking a weighted average of gas prices in Henry Hub (the US), NBP (National Balancing Point, the UK), AGR (Alberta Gas Reference, Canada) and Russia. It was to be revised once in six months based on movement in these indices for a full year,...
More
No comments
Category: Pricing policies & subsidies
Domestic gas price cut – can help end urea mess
Under new pricing guidelines notified in October, 2014, the price of all domestic gas was fixed at US$ 5.61 per mBtu [million British thermal units] on net calorific value [NCV] basis w.e.f November 1, 2014 which was an increase of 33% over US$ 4.2 per mBtu prior to that date. The price was applicable till March 31, 2015. The price was arrived at by taking a weighted average of gas prices in Henry Hub [USA], NBP [National Balancing Point] [UK], AGR [Alberta Gas Reference] [Canada] and Russia. It was to be revised once in 6 months based on movement in these indices for a full year three months prior to the date of next revision. Thus, for price effective from...
More
1 comment
Root cause of inaction in fertiliser reforms
Unless the government accepts a higher MRP for urea, nutrient imbalance cannot be addressed Four major pronouncements on fertiliser reforms need close scrutiny. First, the Prime Minister promised that every farmer would have a soil health card (SHC) to know how much nutrient is needed for a good yield and to keep the soil healthy. What if the results of the soil analysis encapsulated on the SHC require application of more phosphate (P) and potash (K) but the fertilisers carrying these nutrients, other complex fertilisers and so on are too expensive? The pricing consideration Currently, the MRP of dia-ammonium phosphate (DAP, the primary source of P) is four times the price of urea (the main source of nitrogen), whereas muriate...
More
1 comment
Plummeting gas price – golden opportunity for urea decontrol
Until last year, ballooning subsidy on fertilizers and its inevitable effect on fiscal deficit was haunting the government. The prime cause for this was control on selling price of urea on one hand increase in prices of feedstock and fuel on the other. The latter in turn was due to increase in international price of crude oil and imported LNG [liquefied natural gas]. During the current year, the scenario has turned for the better. Thanks to a constellation of forces leading to emergence of excess global supply, the international price of crude has plummeted from a high of around US$ 105 per barrel in June 2014 to below US$ 50 per barrel currently. And, there is nothing stopping the downward movement....
More
No comments
Fertilizer reforms – time to walk the talk
Successive governments have blatantly glossed over reforms in the fertilizer sector for generations. Modi who was catapulted to power on the promise of pushing reforms and development had generated hope. Yet, during last 15 months in office, one only hears loud talk but no action on ground. In this regard, four major pronouncements of Modi – dispensation need close scrutiny. First, the prime minister promised that every farmer has a soil health card [SHC] so that he knows how much nutrient he will need to apply for getting good crop yield and keep soil healthy and robust. This by itself is a herculean task requiring cooperation of all state governments and authorities right up to the village level to ensure...
More
No comments
Uniform fertilizer subsidy policy must for DBT
The subsidy regime, covering both subsidy rates and payment terms, for P&K fertilisers should be brought in sync with urea The discriminatory policy treatment impairs the ability of industry to supply P&K fertilisers to farmers at affordable prices, which will aggravate imbalance in fertiliser use. This makes a mockery of Prime Minister Narendra Modi’s vision behind giving farmers a Soil Health Card so that they apply fertilisers as per soil needs. On May 13, the government released press notes on the approval of the comprehensive New Urea Policy 2015 and the nutrient-based subsidy rates for phosphate and potash fertilisers for FY16. A key announcement was: “Movement plan for P&K fertilisers has also been freed to reduce monopoly of a few...
More
No comments
P&K fertilizers ‘stepmother’ treatment – no end in sight
On May 13, 2015, the Press Information Bureau (PIB), Government of India, Ministry of Chemicals and Fertilizers issued a press release on “Approval to comprehensive New Urea Policy, 2015” and “Nutrient Based Subsidy rates for Phosphate and Potash fertilizers for the year 2015-16”. A major announcement in the aforementioned release was “Movement plan for P&K fertilizers has also been freed to reduce monopoly of few companies in a particular area so that any company can sell any P&K fertilizer in any part of the country. Rail freight subsidy has been decided to be given on a lump sum basis so that companies economize on transport” When, seen in the backdrop of decontrol of all P&K fertilizers and subsidy abolition way...
More
No comments
Go for course correction in urea pricing
The real reason for diversion of urea to industrial use, smuggling, black marketing and its excessive use is its ridiculously low selling price. On May 13, the government approved the Comprehensive New Urea Policy, which seeks to promote energy-efficiency, maximise indigenous urea production, and reduce subsidy burden on the budget. At present, under the New Pricing Scheme (NPS), in use since 2003, each of the 30 urea manufacturing units gets a retention price (or ex-factory price) based on the production cost specific to it. Since all of them are required to sell urea at ‘uniform’ controlled price which is lower, the difference is reimbursed as subsidy. NPS was designed as a group-based uniform pricing scheme, whereby each unit in a...
More
No comments
HIGH COST OF POPULIST UREA POLICY
By keeping urea fertiliser prices artificially low, while non-urea fertilisers have been de-controlled, the Modi regime is encouraging an unhealthy dependence on this product, ignoring its smuggling and pilferage, and allowing the subsidy bill to increase The Union Government’s decision to freeze the maximum retail price of urea for four years is bewildering. The decision was taken on May 13 at a Union Cabinet meeting chaired by Prime Minister Narendra Modi. During the past one-and-a-half decade or so, the MRP of urea, which has been under statutory control for close to six decades now, was not touched at all — except once in 2010, when it was increased by a meagre 10 per cent. This was despite the fact that...
More
No comments
Urea price hike – put in deep freezer
A major decision taken by the government in the May 13, 2015 meeting of the Union Cabinet – chaired by Prime Minister, Shri Narendra Modi – was to keep maximum retail price (MRP) of urea frozen for a period of 4 years. This can throw any logical person in to a state of bewilderment! During the last one-and-a-half decade or so, urea MRP which is under statutory control [for close to six decades now] was not touched at all except once in 2010 when it was increased by a meagre 10%. This was despite inflationary forces gripping all other sectors and minimum support prices (MSP) of paddy, wheat and other cereals increasing manifold. The current MRP is ridiculously low at...
More
No comments