After a year-long gap, the ammonia plant at the public sector FACT has resumed operations using LNG as the feedstock.
The use of LNG in the fertiliser company was stopped on January 10, 2014, when the price of natural gas went up to $24 per mmBtu.
However, the recent agreement between FACT, GAIL, and Minerals and Metals Trading Corporation, has paved the way for restarting ammonia production at the Udyogamandal plant.
According to officials, the use of LNG in FACT has been facilitated by the involvement of MMTC, as they deal directly with GAIL for arranging payment to the suppliers. FACT has an agreement with MMTC for supply of LNG at $10.9 per unit till April 21, 2015. Production is expected within a week.
Along with a fall in the price of crude oil in the international market, the officials said there has been a steep fall in the price of natural gas also. This has enabled the company to receive LNG at the rate of $10.9 per unit (exclusive of VAT). Though the Kerala Government has formally announced waiver of VAT for LNG, an official notification in this regard is yet to be released. It is expected that the official notification will be issued shortly.
The officials hoped that restarting of the ammonia plant would help improve the company’s financial position and enable it to get Central Government aid to tide over the crisis.