The Government has approved continuation of urea production from Madras Fertilizers, Manali, Tamil Nadu; Mangalore Chemicals and Fertilizers, Mangalore and Southern Petrochemicals Industries Corporation -Tuticorin using Naphtha as feedstock till availability of gas. The decision was taken by the Cabinet Committee on Economic Affairs, chaired Prime Minister Narendra Modi.
However, the Governments of Tamil Nadu and Karnataka would be required not to charge VAT or entry tax on the Naphtha/FO as decided in the earlier meeting of the CCEA in December 2014.
There are only two urea units at Kakinada in the entire Southern region other than these three units. If these three units would have been closed, then the entire requirement of the Southern region would have had to be sourced mainly through imports. Continuation of operation of these three units would substantially ease the problems of urea supply in Southern states during the ensuing Kharif.
These three naphtha based urea units with an annual capacity of 14.88 lakh metric tonne will cater to the demand in the Southern states of Karnataka, Tamil Nadu and Kerala throughout the year.
The production of urea by these units will ensure timely and adequate availability of urea to farmers of the Southern states and will result in import substitution of urea.