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Faced with a liquidity crunch, fertiliser industry body FAI has written to Finance Minister Arun Jaitley seeking arrangement of funds to clear outstanding subsidy arrears, which are likely to cross Rs 40,000 crore by March-end.
In a letter to the Finance Minister, the Fertiliser Association of India Director-General Satish Chander has said domestic urea manufacturers have not been paid since August 2014. Therefore, a number of plants have resorted to a shutdown.
Chander also pointed that while domestic fertiliser manufacturers suffer “due to non-payment of dues for months together, upfront payments are made to foreign suppliers”.
“The accumulated unpaid subsidy dues for the entire fertiliser industry are likely to exceed Rs 40,000 crore by March, 2015...Domestic urea manufacturers’ payment arrears will exceed Rs 30,000 crore this year,” the letter said.
The industry body has also appealed to the Minister to “intervene” and help with some arrangements, including Special Banking Arrangement (SBA) of funds to tide over the liquidity crisis of fertiliser companies.
Chander added that this problem has aggravated over the last few years. The carryover of unpaid dues was to the extent of Rs 35,000 crore from 2013-14 to 2014-15.
The Government had allocated Rs 72,970.30 crore for fertiliser subsidy in the 2014-15 Union Budget.
Of this, Rs 12,300 crore was meant for imported urea, Rs 36,000 crore for domestic urea and the rest Rs 24,670.30 crore for sale of partially de-controlled fertilisers (such as phosphatic & potassic fertilisers).
Meanwhile, the Fertiliser Ministry has sought about Rs 12,500 crore from the Finance Ministry for making subsidy payments to domestic manufacturers.
Urea is provided to farmers at a fixed subsidised maximum retail price (MRP) of Rs 5,360 per tonne. The difference between the cost of production and MRP of urea is provided as subsidy to manufacturers.
In case of decontrolled fertilisers, the companies are free to decide retail prices as subsidy is fixed on these soil nutrients.
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