This will be estimated through a study of the gap between production costs and the currently allowed maximum retail prices. If input prices are found to have risen beyond earlier assessed levels, concessions allowed to fertiliser firms will have to change accordingly.

BICP will conduct a study and collect data from manufacturers to estimate the actual cost on production of DAP. This will enable the government to arrive at a concession to be given on these decontrolled fertilisers. The concession amount for complex fertilisers will be proportionately calculated.According to industry sources, the BICP appointment comes in the wake of escalation in input costs because of which some manufacturers are incurring losseson certain complex fertilisers. BICP will also take this into consideration in addition to keeping a tab on how scrupulously the manufacturers have calculated the increase in input costs. BICP will pick out on the inefficiencies in calculating the cost of production in the system, said sources.

The same process is undertaken for controlled grades of fertilisers by the Fertiliser Industries Co-ordination Committee. The BICP will undertake the study on decontrolled grades only.

DAP is both indigenously produced and imported to meet the demand in the country. MOP is entirely being imported into the country.

While the government has already announced that there will be no rise in the maximum retail price (MRP) of DAP to the farmer, concessions on the same will be decided to compute the subsidy amount. The maximum retail price of DAP is around Rs 8,300 a tonne.

Industry sources said that they were not aware as to how much time BICP will need to determine the concession amount. The task has been initiatedto determine the concession for the current kharif season.

It is believed that BICP has asked for three months to determine the same. This, point out industry sources, may delay the concession disbursement process to the manufacturers, who are already reeling under liquidity problems owing to delays in subsidy disbursements.

This may not augur well for the country, which may face a shortage problem as far as imports are concerned, sources said. The government's recent decision to cut subsidy on imported DAP with retrospective effect from October 1, 1997, has led most traders to either move away from imports of delay the process owing to the uncertainty regarding the subsidy level.

Besides, manufacturers are also demanding that the nitrogen nutrient level in all decontrolled fertilisers be taken into consideration, while fixing the concession. Manufacturers feel that the `N' factor is being ignored, and thus they are not being fully compensated as far as subsidy on decontrolled fertilisers is concerned.