Cabinet clears marketing margin for supply of domestic gas to urea plants

New Delhi: The Cabinet on Thursday approved the determination of the marketing margin on the supply of domestic gas to fertiliser (urea) units for the period from May 1, 2009, to November 17, 2015.

"This approval is a structural reform," the Ministry of Petroleum & Natural Gas said in a release.

Marketing margin is charged by gas marketing companies from consumers over and above the cost of gas for taking on the additional risk and cost associated with gas marketing. The government had previously determined the marketing margin on the supply of domestic gas to urea and LPG producers in 2015.

"The approval will provide additional capital to the various fertiliser (urea) units for the component of marketing margins paid by them on domestic gas procured from May 1, 2009, to November 17, 2015, based on rates already being paid from November 18, 2015 onwards," the release said.

In line with the government's vision of AatmaNirbhar Bharat, the approval will incentivise manufacturers to increase investment.

The increased investment will lead to self-sufficiency in fertilisers, and provide an element of certainty for future investments in the gas infrastructure sector.