Chennai, Feb. 1
MADRAS Fertilizers Ltd, which was to be shut down today due to feedstock shortage, hopes to continue production following Petroleum Ministry's intervention on its behalf with Chennai Petroleum Corporation Ltd (CPCL).
According to the MFL Chairman and Managing Director, Mr Sukumar N. Oommen, Fertiliser Department officials have spoken to their colleagues in the Petroleum Ministry to prevail upon CPCL to continue supplies of naphtha and furnace oil on credit basis.
Mr Oommen said that CPCL is yet to respond to this development. MFL has two days' supply of feedstock and plans to continue production. But under the circumstances, MFL would take it one day at a time, he said.
CPCL, which had been extending credit on supplies of feedstock and fuel, began insisting on cash and carry transaction after MFL's dues increased to Rs 90 crore.
However, with the fertiliser company going through a cash crunch, and the Government delaying payment of urea subsidy, MFL officials had said last week that MFL would have to shutdown if CPCL refused credit.
Officials had pointed out that MFL's financial crunch was not of its own making. Apart from the new fertiliser policy, which they said short changed it on production costs, the Government owed MFL over Rs 200 crore as urea subsidy under the new policy.
The company's daily expense on naphtha and fuel was about Rs 2.5 crore. When the company sells a tonne of urea at about Rs 4,000 it recovers only about 30 per cent of the cost from the market because it is produced at Rs 12,000. The balance 70 per cent is the subsidy that the Government has to pay it.