Action committee seeks govt help to keep FACT afloat

Our Bureau Kochi | Updated on July 09, 2012 Published on July 09, 2012

The Save FACT Action Committee has sought immediate measures from the government for the sustained and profitable operations of FACT Ltd.

In a memorandum submitted to the visiting Standing Committee on Chemicals and Fertilisers, the action committee pointed out that FACT has been struggling to keep the bottom lines only because it does not have a level playing field with other fertiliser companies.

Capacity utilisation

Even though the company’s fertiliser plants are 35 to 40 years old, it still maintains fertiliser production at 130 per cent of the capacity while the national average capacity utilisation is only 70 per cent.

With its innate and immense potential, the company can do wonders provided a little help and a level playing field are extended, the action committee said.

FACT is not able to attain its full potential because of shortcomings in the new fertiliser subsidy scheme, the action committee said.

Funds crunch

Mr V.D. Satheesan, chairman, and Mr K. Chandran Pillai, convenor of the action committee, pointed out that the raw material procurement and production are affected quite often because of working capital crunch.

The international consultants appointed by the government in 2008 had recommended an interest-free interim support of Rs 450 crore to meet the operating cost deficit. The recommendation had not yet been considered by the government.

It is pointed out that the working capital requirement in fertiliser industry has increased manifold due to the exorbitant increase in the prices of raw material. In this situation, the action committee said, sustained and profitable operation could be ensured by immediate sanctioning of the interim support.

LNG pricing

The action committee also called for a rational pricing of LNG for a level playing field as the gas purchase agreement with GAIL has not yet been arrived at for reasons of high price.

The government should take appropriate steps in this regard at the earliest as the commissioning of LNG Terminal at Kochi is expected soon and FACT is going ahead with the plant modification to use LNG as its feedstock.

The action committee also sought immediate sanctioning of diversification proposals.

Published on July 09, 2012
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