DoF opposes gas priority abolition1 min read . Updated: 02 Jul 2013, 04:54 PM IST
DoF has said it opposes any move that either increases the gas price or reduces the gas supply
New Delhi: Department of Fertilizers (DoF) has opposed the proposal of abolishing top priority given to urea plants in natural gas allocation ahead of a high-powered ministerial panel meeting to consider it.
“The EGoM (empowered group of ministers) meeting is scheduled for 17 July," oil secretary Vivek Rae said.
The EGoM headed by the defence minister A.K. Antony will meet to consider the oil ministry’s proposal to abolishing the priority ranking according to which natural gas is first given to urea manufacturing fertilizer plants, then to LPG units, followed by power plants, city gas, steel and refineries.
“The department opposes any move that either increases the gas price or reduces the gas supply," said an official who requested anonymity.
He also rejected the veracity of the calculation according to which at one hand government’s subsidy burden would increase by ₹ 5,591 crores due to this move but on the other hand, the production cost of power projects forced to use re-gasified LNG would go down by ₹ 10,900 crore per annum.
“Even if it is true, one has to see who is getting benefited at the expense of the government," he said, hinting towards the fact that a lot of power plants are private entities.
If available gas is to be redistributed among the four core sectors, it would reduce supplies to fertilizer plants by 9.44 mmscmd and lead to an extra urea import of 4.73 million tonnes.
Satish Chander, director, Fertilizers Association of India (FAI), a lobby group of fertilizer industry said that the subsidy burden is surely going to increase but refrained to make any comment on whether the industry is in favour of the proposal or not.
To be sure, gas is a complete pass through for a urea manufacturing plant, which means that the government reimburses the entire cost in the form of subsidies.
PTI contributed to this story.