GoI has notified New Investment Policy – 2012 on 2nd January, 2013, for gas based urea manufacturing plants.
Floor and ceiling price is calculated at delivered price of gas from US $6.5 to US $ 14/mmbtu.
The floor price has been determined at a Return on Equity (RoE) of 12% and the ceiling price at a RoE of 20%.
Floor and ceiling shall increase in tandem with increase in delivered gas price for Greenfield/Revival and Brownfield Projects.
Every USD 0.1/mmbtu increase in delivered gas price will increase the floor and ceiling by USD 2/MT upto delivered gas price of USD 14/mmbtu.
Beyond delivered gas price of USD 14/mmbtu, only floor will be increased.
In case of revamp projects, floor and ceiling have been linked to delivered gas price of USD 7.5/mmbtu and floor and ceiling shall increase by USD 2.2/MT for every increase in delivered gas price of 0.1/mmbtu.
It encourages investment by Indian industry in Joint Venture abroad in resource rich countries
For units in North Eastern states, the special dispensation regarding gas price that is being extended by GOI/State governments will be available to any new investment. Suitable adjustments will be made to applicable floor and ceiling price in case the delivered price (after allowing for special dispensation) falls below USD 6.5 per mmbtu, subject to approval of Ministry of Finance.