Determination of Marketing Margin for Domestic Gas to Fertilizer Units Approved

• 03 Feb 2024

On 1^st February, 2024, the Union Cabinet granted approval for the determination of Marketing Margin on the supply of domestic gas to Fertilizer (Urea) Units for the period spanning May 1, 2009, to November 17, 2015.

Key Points

• Structural Reform for Marketing Margin: The approval marks a significant structural reform as Marketing Margin is the additional charge imposed by gas marketing companies on consumers beyond the gas cost.
• It is designed to compensate for the additional risks and costs associated with gas marketing.
• The government had previously determined the marketing margin for the supply of domestic gas to urea and LPG producers in 2015.
• Capital Boost for Fertilizer Units: It addresses the component of marketing margins paid by these units for domestic gas procured during the period from May 1, 2009, to November 17, 2015, based on the rates already in effect from November 18, 2015, onwards.
• AtmaNirbhar Bharat Vision: Aligned with the AtmaNirbhar Bharat (self-reliant India) vision of the government, this approval serves as an incentive for manufacturers to enhance their investments.
• The increased investment is anticipated to contribute to self-sufficiency in fertilizers and instill certainty for future investments in the gas infrastructure sector.