MCFL, 2 others seek subsidy for urea plants beyond April 16

NEW DELHI: Vijay Mallya-led MCFL and two other fertiliser firms have demanded that government should continue paying subsidies to their naptha-based urea plants beyond the April 16 deadline as these factories have not yet been connected with gas pipeline.
On January 7 this year, the Centre decided to give subsidy to these three urea plants, which uses naptha as feedstock, for the next 100 days to restart these facilities which were closed since October, 2014.

The government had asked these companies to convert their plants into gas-based, but in absence of gas-connectivity these plants are forced to run on costlier naptha.

"We have requested the government to allow us to operate beyond 100 days as we have not been provided the connectivity to gas pipeline so far," Mangalore Chemicals and Fertilisers Ltd (MCFL) Managing Director Deepak Anand told .

Madras Fertilizers and SPIC have also made similar requests to the fertiliser ministry.

In a letter to Fertiliser Minister Ananth Kumar, SPIC has sought extension of the deadline, saying that this would not result into additional subsidy burden on the exchequer.

"Naphtha based plants would be paid subsidy on the basis average of spot RLNG or Naphtha whichever is lower. Therefore, there is no additional outflow to government on account of these units. If at all the outflow on account of subsidy can only be lower but in no case it can be higher than what is being paid to RLNG based units," SPIC noted.

A senior fertiliser ministry official said production of urea from these three plants are necessary for meeting the demand of key soil nutrients in southern region.

In a statement issued on January 7, Fertiliser Ministry had said "... for three fertiliser plants, viz, Mangalore fertilizers, Madras fertilizers and SPIC Tuticorin plants which were running on naphtha, the Government has decided to give subsidy on naphtha for next 100 days and these 3 plants will soon restart."

The minister had also said that the issue of "Right of Way for laying the gas pipeline from Kochi to Mangaluru has been resolved."

Urea is the controlled commodity as its selling price is fixed at Rs 5,360 per tonne. Difference between the cost of production and selling price is paid as subsidy to manufacturers.