Cabinet Approves Gas Pooling for Fertilizer Sector

  • The Cabinet on Tuesday approved a proposal to pool or average out prices of domestic natural gas and imported LNG used by fertilizer plants to make the cost of fuel uniform and affordable.
  • Fertilizer plants consume about 42.25 million standard cubic meters a day (mscmd) of gas for manufacture of subsidized urea. Out of this, 26.50 mscmd comes from domestic fields and the balance 15.75 mmscmd is imported liquefied natural gas (LNG).
  • Telecom Minister Ravi Shankar Prasad said gas pooling would help save Rs.1,550 crore in subsidy, and would benefit 30 urea plants.
  • The cost of gas, which is the most important component for production of urea, varies from plant to plant owing to differential rates at which imported LNG is contracted as well as the cost of transportation.
  • This would help in focusing on improving plant efficiency and might help in price advantage in sourcing of LNG, he said.
  • The move would help bring down the cost of fuel and help save subsidy.