Chemicals and fertilisers minister Suresh Prabhu told The Financial Express that the long debated pricing policy for urea has finally been approved by the finance ministry and will also be taken up by the committee of secretaries together with issues including balanced use of fertilisers, feed stock policy, policy for joint ventures and WTO requirements.

Issues like viability of coal-based technology, integrated application of fertilisers and long-term demand and supply of fertiliser have also been dealt with in the long-term policy.

After the approval from committee of secretaries, the fertiliser department has planned five major seminars across the country to discuss the policy in details with various groups including fertiliser organisations, consumer organisations, state governments, media and experts.

Specific regional problems and other issues raised in the seminars will be considered by the ministry and if necessary, amendments too will be made, the minister said. "The entire process should not take more than three months. The long-term fertiliser policy is expected to be notified by September."

The draft fertiliser policy will be placed on the ministry's website for general accessibility.

Prabhu said that to meet WTO regulations and the challenge of doubling food production, it was high time that the government evolved a new fertiliser policy which would gradually move away from the present Retention Price Scheme and work towards attracting more investment in the sector.

According to sources, the ministry has proposed that the retention price scheme for calculating compensation for urea units should be replaced with a long-range marginal cost principle. Under the new pricing policy, the government plans to stop giving unit specific compensation to the industry.

Instead, the long range marginal costs of urea plants will be worked out based on the type of feedstock being used, and units will be compensated accordingly.

This means that instead of reimbursing urea units individually on the basis of the accounts of costs submitted by them, the government will work out three separate packages for plants running on naptha, gas and fuel-oil and pay units a pre-fixed amount.