RG Rajan, CMD, Rashtriya Chemical Fertilisers (RCF) explains on CNBC-TV18 that the new investment policy, based on import parity pricing, maybe approved during this week or next and calls for a hike in urea prices as P&K (phosphorus and potassium) prices have gone up.
Below is an edited transcript of the interview on CNBC-TV18.
Q: There are reports that the Cabinet is expected to take up a urea policy. There have been a lot of reports and speculation on urea policy during the entire fiscal. Do you expect something more substantial going forward?
A: I think there are two policies which the government is now contemplating to discuss and implement. One, is the new investment policy and other is the fixed costs for the existing plans.
Q: Can you give us more details with regards to the fixed costs as well as the new urea investment policy?
A: The new investment policy it will be based on import parity pricing. I think this policy will be approved maybe this week or next week. The approval for the policy on fixed cost may take little more time.
Q: What is the requirement for raising urea prices because there are a lot of speculative reports that possibly urea prices could be hiked by 10 percent?
A: There is a requirement to raise the urea prices because the P&K (Phosphorus and Potassium) prices have gone up considerably while urea prices remain the same level and so this has caused an imbalance in the utilization NPK (nitrogen-phosphorus-potassium) and more urea is being utilized. So, from that aspect there is a need for urea price increase, but only the government can take a call on that.
Q: What is your expectation that urea prices will be linked to imported gas?
A: It is going to happen very soon and a number of plants and projects are going to come up including the Thal III project which is at an advanced stage of construction.
Q: Will it be contingent on the policy being accepted and if that is the case when do you see the plant being completed?
A: The plant will take around three years, after actual execution, to complete. The policy is a very positive and we expect the policy to be approved maybe in this week or next.
Q: How much would be divested by the government in RCF?
A: Our board has recommended a divestment of around 12.5 percent and I believe that proposal has gone to Controller of Certifying Authorities (CCA) for approval. The divestment may be conducted in last quarter of the financial year and the government expects Rs 370-380 crore from this disinvestment.