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Urea price could be increased

June 10, 2014

THE fertiliser ministry is likely to move a proposal to increase urea prices only after the petroleum ministry announces a decision on hiking natural gas prices, which would raise the cost of producing the fertiliser.

"We don't know yet how much the gas price increase will be and when it will be implemented. Let the petroleum ministry announce the gas price hike first. Then we will firm up our plans," a fertiliser ministry official said.

For every $ 1 per mmBtu increase in gas prices, the subsidy bill will for urea will rise by $ 406 million ( over ` 2,395 crore). Fertiliser plants are collectively the biggest consumer of domestically produced gas getting supplies of 31.5 million standard cubic meters of the fuel daily.

"There were some rumours in the market last week about price increase due to which fertiliser company stocks went up. Today, too, there is a report but I can tell you categorically that there is no proposal to increase prices just yet,'' a senior fertiliser ministry official said.

Urea is the most widely used fertiliser in the Indian farm sector and its maximum retail price ( MRP) is fixed at ` 5,360 per tonne. The government pays manufacturers the difference between cost of production and MRP. A marginal increase in urea prices over the past 10 years and a projected rise in the subsidy bill that will follow the likely near- doubling of natural gas rates to $ 8.2- 8.4 per million British thermal units may make a urea price hike inevitable.

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Source: Mail Today (India)

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