The Ministry of Petroleum through the Department of Fertilizers has asked fertilizers firms in the South to contact their naphtha supplier to arrive at a mutual consensus for fixing the feedstock price.
Accordingly, the three naphtha-based urea manufacturers – Madras Fertilizers Ltd, Southern Petrochemical Industries Corporation (Tuticorin) and Mangalore Chemicals and Fertilizers Ltd (Mangalore) – have written to Indian Oil Corporation and Mangalore Refinery Petrochemicals Ltd to supply naphtha at export parity price. However, the oil majors are yet to respond to the distress call.
Out of 33 fertilizers units in the country, these three units does not have linkage to gas grid and hence have to depend on naphtha for production of urea and ammonia. They have remained closed since October as the Centre had stopped providing subsidy to those firms that have not switched over to gas.
While the rest of the fertilizer firms in the country have access to natural gas, these firms might not get natural gas till 2017-18. Hence, the Fertilizer Minister stepped in assured that a lasting solution would be arrived upon soon.
According to the sources, the Petroleum Ministry had sent a communication them firms to arrive at a consensus and also finalise other terms and conditions. Later, these firms have to sent in their reply to the Ministry through Department of Fertilizers.
In the meanwhile, the export price of naphtha had dipped to Rs.39,000 per tonne from Rs.57,000 per tonne. The import parity price is about Rs.45,000 per tonne. However, oil majors are yet to make up their mind, as they are reaping profits by exporting it. A reduction of Rs.6,000 per tonne would augur well for the fertilizer firms.
“It is a know fact that we will not be having access to natural gas grid till 2017-18. IOC LNG terminal at Kamarajar Port will happen only by 2018. Till then, it is their duty to protect the existing customers like us, who are going to be the future customer too. They have to treat us like an importer and provide the feedstock at reduced rate,” said a MFL official.
