Chennai, Jun 10 (IANS): The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi on Wednesday approved continued production of urea at three fertiliser units using naphtha as feedstock.

Madras Fertilizers Ltd., Mangalore Chemical and Fertilizers Limited and Southern Petrochemicals Industries Corporation will use naphtha till the availability of gas through pipelines or by any other means.

Continuation of operation of these three units would substantially ease the problem of urea supply in India's southern states during the ensuing Kharif season, the ministry of chemicals and fertilizers said in a statment.

The Tamil Nadu and Karnataka governments would not charge value added tax (VAT) or entry tax on naptha, as decided at a meeting of the CCEA in December 2014, the statement added.

There were only two urea units at Kakinada (Andhra Pradesh) in the entire southern region of India, other than these three units.

If these three units were to close, the whole requirement of India's southern region would have to be sourced mainly through imports.

These three naphtha-based units with an annual capacity of 14.88 lakh tonnes will cater to the demand in Karnataka, Tamil Nadu and Kerala (around 22.5 lakh tonnes per annum) throughout the year.