The Hindu Business Line : New fertiliser policy likely this month

New policy guidelines for the fertiliser industry , currently operating on high cost of naphtha and fuel oil to convert to gas, are likely to be announced by the Centre this month, according to Mr Gurdial Singh Mangat, Chairman and Managing Director of National Fertilisers Ltd (NFL).

Speaking to Business Line on Wednesday, Mr Gurdial Singh, who was here to take over the additional charge of the CMD of Fertilisers and Chemicals Travancore Ltd (FACT), said the Government was expected to look into the subsidy aspect and the difference in cost of production and the market realisation at present.

According to him the fertiliser companies currently operating on naphtha and fuel oil continued to incur losses and therefore they needed to be using gas. But, that would involve substantial capital cost.

As far as FACT is concerned, he said, once the proposed LNG terminal at Kochi is commissioned the unit could switch over to gas and until then it would be difficult for the company to earn profits.

As part of the cost reduction measures, FACT has started using imported ammonia for production of fertilisers. The first ammonia consignment of 7,200 tonne imported from Saudi Arabia was unloaded to the company's storage tank at Willingdon Island recently. The landed cost of imported ammonia was lower than that produced at the company's naphtha-based ammonia plant. This would be used for producing factamfos in its Kochi Division, he said.

`No' to FACT merger

On the proposed merger of FACT with some other public sector fertiliser company, he said, "I am personally not in favour of it as the FACT has the potential strength to come out of the red once LNG is made available".

Besides, it has huge assets, which could be productively utilised for diversification and increasing the revenue, he said.

The fertiliser manufacturers feel that there is a need to bring in a rationalised feedstock price for all the fertiliser manufacturing units besides creating a market realisation matching the cost of production through government subsidy. The government is understood to be considering this aspect also, he said.

FACT has a vast pool of technocrats and proven expertise in the industry and project management, who can lead massive industrialisation projects.

It also owns large assets including 2,500 acres of land. The present crisis will be short lived. When it starts operating on imported ammonia the losses are bound to ease, he said.