The 900-tonne-per-day plant was commissioned in 1998 at a cost of Rs. 720 crore after the High Court of Kerala ordered the closure of FACT’s ammonia tank on Willingdon Island
People familiar with the history of Fertilizers And Chemicals Travancore (FACT) trace the roots of the current crisis of the company to a decision to commission an ammonia plant.
The 900-tonne-per-day plant was commissioned in 1998 at a cost of Rs. 720 crore after the High Court of Kerala ordered the closure of FACT’s ammonia tank on Willingdon Island, used to store the imported product.
The court order came on a petition that the presence of the tank in the heart of Kochi, close to the naval airport, posed a grave threat to life in the city. It was alleged that the 10,000-tonne capacity tank was capable of turning Kochi into another Bhopal.
FACT officials point out that there were, at that time, about 400 similar storage facilities across the globe against which no agitations were reported to be organised.
The matter was taken to Supreme Court of India and the government took a stand that FACT would not require the Willingdon Island tank for long as an ammonia plant was being built.
The Supreme Court later struck down the High Court order. But by that time work on the new plant had got under way and it was not possible to withdraw from the project, recalled a former FACT official.
Until then, FACT depended mostly on imported ammonia, that being a much cheaper option. Imported ammonia was cheaper because the feedstock on which it was produced was natural gas. However, FACT had to use the costly naphtha though there was expectation that natural gas would be available in Kochi by 2000.
There appears an element of compulsion on the part of the FACT management to go in for the plant. However, “it was a conscious decision at that time” considering the economic circumstances in the wake of the liberalisation of the Indian economy, said the former official.
The official said the project was in fact called the Replacement Ammonia Plant, implying that the new plant was meant to replace an existing plant.
There were also expectations on the part of the workers and the State that a whole lot of benefits could accrue to them from the new ammonia plant, said the former official.
The irony of the tank story is that FACT continues to use the same tank on Willingdon Island for storing imported ammonia even now. Between then and now, FACT has incurred a loss of Rs. 2,000 crore, which has been written off by the Union government.
Had it not been for the ammonia plant, claimed a FACT official, “the company would have had an employee strength of about 11,000 (currently 2,800) and make a profit of Rs. 2,000 crore”. The company recorded a loss of over Rs. 350 crore during 2012-13.