The Hindu Business Line : All sick fertiliser units will be revived: Paswan

Paswan says
Consumption likely to cross 300 lt in five yrs.
Govt will revive FACT to meet needs in Kerala, other States.
Reimbursement of outstanding subsidy to units by June.

Mr Ram Vilas Paswan

Kochi May 10 Given the growing consumption of fertilisers in the country, the Union Government has decided to revive all the sick fertiliser units besides reopening those closed, according to the Union Minister for Chemicals and Fertilisers and Steel, Mr Ram Vilas Paswan.

Addressing a press conference here on Thursday, Mr Paswan said that six units would be revived/reopened, involving a total investment of Rs 22,000 crore. Announcement of this decision was held up because of the Uttar Pradesh Elections, he said.

He said that the consumption of fertilisers in the country was at 250 lakh tonnes (lt) last fiscal as against 230 lt the year before. It is estimated to cross 300 lt within five years.

Whereas the indigenous production is at 200 lt,16 lt is produced by a joint venture unit with Oman. The balance requirement is met by imports, he said. It is this situation which has compelled the Government to take a decision to revive/reopen all the sick and closed units, he said.

Urea shortage

The country is now facing acute shortage of urea and the international prices are ruling high. According to Mr Paswan, all the fertiliser units, which are not using the high cost naphtha as a feedstock are doing well, while those running on naphtha would also become profitable once LNG becomes available.

Till such a situation emerges, the loss-making units need to adopt strategies for sustaining their operations. LNG is expected to be available in Kochi by 2010-11 and hence it is possible to revamp the Fertilisers and Chemicals Travancore Ltd (FACT) plants with this cheap feedstock.

Given this scenario, revival of FACT has become important and hence the Government is planning to implement the revival package, including setting up of a brownfield project with total replacement of the existing ammonia plant, revamping of the existing urea plant and utilising the infrastructure and utilities to the maximum extent possible with a significant cost advantage compared to a greenfield project.

The urea needs of Kerala and adjoining States could be met with this measure, he said. The estimated cost of the project is Rs 1,500 crore for 7.2 million tonnes output per annum.

Caprolactam capacity

Besides, the caprolactam plant would be expanded from the present 50,000 tonnes a year to 1.5 lakh tonnes a year with technical assistance from the process licensors, DSM of Netherlands, at a total cost of Rs 400 crore. Once LNG becomes available, this unit would also improve its profitability, the Minister said.

It would be accompanied by a nylon project at a cost of Rs 300 crore which would utilise 25 per cent of the expanded caprolactam capacity. Thus, a total investment of Rs 2,200 crore would come to FACT for its revival and these proposals would be presented before the Cabinet soon for its approval, he said.

Infrastructure plans

In addition, in coordination with the Kerala Government, FACT is planning to utilise the land available with it for developing infrastructure projects in collaboration with the State Government or companies promoted by the State Government, he said.

These projects include developing a new IT park, a food park for agro-food industry and a Defence park for manufacturing ancillary products needed by the DRDO, he said. The proposed diversified operations would improve the profitability of FACT besides generating more employment in the long run, Mr Paswan added.

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