The Hindu Business Line : MFL optimistic on getting LNG from Iran

INDIA may have broken Iran's heart but that does not mean all links are cut and liquefied natural gas (LNG) could well come to India, according to a nominee of an Iranian promoter company on the board of Madras Fertilizers Ltd (MFL).

He was talking to Business Line in the context of MFL hoping to source LNG next year to enable it to switch its feedstock from naphtha to LNG.

The nominee said, Iran is a friend but `India has broken Iran's heart' (by voting against it at the International Atomic Energy Agency). However, these are political issues and it does not mean all links are cut. Such matters evolve with time, he said commenting on news reports which said that the Iran LNG export deal was off.

Sources said that at its board meeting on Wednesday MFL had mooted a proposal to put up a phosphoric acid plant in Iran and an LNG terminal in Chennai in collaboration with the Iranian companies and an Indian public sector enterprise. But the Iranian directors had said that their interest in any investments would depend on a positive change in urea pricing policy, which was now biased against MFL. The policy was responsible for MFL's losses.

MFL's Chairman and Managing Director, Mr Sukumar N. Oommen, said that MFL continues to be optimistic on being able to get LNG from Iran. The promoter companies in Iran have also evinced interest in bringing in investments into MFL but they are particular that the urea pricing policy that is adverse to MFL is sorted out.

Addressing the annual general meeting, Mr Oommen said that the company has represented to the Board for Reconstruction of Public Sector Enterprises (BRPSE) in March and the BRPSE's recommendations are awaiting the Cabinet's approval. Positive developments are expected in a couple of months, he said.

MFL has not been adequately compensated under the group average retention pricing scheme for urea and also on the depreciation and capital related charges for the Rs 700-crore investment that it made between 1993 and 1998.

MFL would get a benefit of Rs 130 crore once the recommendations are approved. In which case, MFL would be able to report a profit of Rs 60 crore against a loss of Rs 58.39 crore in 2004-05. For now its total accumulated losses as on March 31, are about Rs 267.18 crore.

Though the company came under the purview of BIFR in 2003-04 it has been permitted to remain without registration as a sick company in view of the ameliorative measures on the anvil.

MLF would have to invest about Rs 8 crore if it has to shift its feedstock from naphtha to LNG. It is in discussions with GAIL and LNG Ltd, Australia, in this regard.

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