3.During Stage-I, following measures would be put into effect:

3.1. Ratesof concession for the units in each group to be determined in two steps. In Step-I, the weighted average retention price and the dealer’s margin of the units in the respective group as applicable on 1.4.2002 would be computed.Units having exceptionally high or low retention price, i.e. deviation of 20% and above with reference to group average computed in Step-I are to be treated as outliers in their respective groups.In Step-2, the final weighted average group retention price after excluding the outliers will be computed.

3.2. The group concession rate on 1.4.2003 would be computed on the data of the units on 31.3.2003 as applicable.To determine that, the retention prices as notified for the half year up to 30.9.2002 would be taken as the base and the adjustment on the basis of 8^th pricing period for the remaining period, i.e. 1.10.2002 to 31.3.2003, shall be made before the end of financial year 2003-2004.

3.3. Effective 1.4.2003, the units in each group would receive the concession after adjustment on account of escalation/de-escalation in the variable cost related to changes in the price of feedstock, fuel, purchased power and water. The modalities for this purpose will be worked out by DOF for Stage-I and Stage-II on the basis of group energy data and efficient consumption patterns of the units keeping in view the data of 8^th pricing period.

3.4.Thoseunits which have lower retention price than the weighted group average (estimated after excluding the outliers as final group retention price) are to get the concession as per their individual retention price.The remaining units (excluding outliers) are to get the concession based upon the weighted group average retention price computed after excluding the outliers. This basis would be valid for Stage-II also.

3.5. After commencement of Stage-I and also beyond Stage-II, there shall neither be any reimbursement of the investment made by a unit for improvement in operations nor any mopping up of gains of the units as a result of operational efficiency. The parameters outlined in the new scheme shall be the inputs for computation of concession.

3.6. The outliers having a retention price higher than 20% or more from the group average in their respective group would be granted an adjustment phase of one year, i.e. Stage-I.During Stage-I, such outliers will get a rate of concession based upon the group weighted average (after excluding outliers) and a structural adjustment which will be 50% of the difference between their respective retention price and the group average computed as Step-II mentioned in para 3.1.

3.7.   Group concession rates will be calculated excluding the incidence of sales tax on inputs which will be computed and compensated on the basis of rates effective on 1.4.2002 for each unit. However, the compensation would be proportionately reduced if the rates are reduced by any State.

4.During Stage-II, i.e. from 1.4.2004, the following measures shall be put into effect :

4.1.There will be no special treatment for the outliers and all the units will get the group rate of concession as outlined earlier for Stage-I.The units having lower concession rate than the group average shall continue to get the concession as per their individual concession rate. The six groups would remain as in Stage-I.

4.2. The concession rates shall be adjusted for reduction in capital related charges.Further, the group energy norms would be enforced on efficiency considerations.The Department of Fertilizers would take into consideration the recommendations of the Gokak Committee in determining the group energy norms.The scale of reduction on account of capital related charges (CRC) would also be finalized by the Department of Fertilizers.Thus, the adjustments on account of CRC and group energy norms effective in Stage-II would be made known to the units so that they have reasonable time for making necessary technological and other structural adjustments.

 5. Under the new Scheme, there will be no capping on production of urea. The use or sale of by-products such as ammonia, CO₂etc. will be permitted in case considered surplus beyond the reassessed capacity for urea production. The final concession would be determined on the reassessed installed capacity. The additional production beyond the installed capacity would receive concession if it is mopped up under the ECA allocation. The feedstock/fuel ratio for the entire production would be taken into consideration for assessing the concession.