The financial crisis facing Fertilizers and Chemicals Travancore will have long-term consequences for the public sector company, including closure of key plants. The company faces a standstill if the government does not intervene within a week.
The caprolactam plant at FACT has been closed for 20 months now. The ammonia plant has been shut down intermittently through the last financial year, causing engineers to raise questions about the long-term health of these plants.
“Intermittent shutdowns raise question on the health of these plants,” said an anxious communication from Save FACT Action Committee, which has been spearheading an agitation seeking government intervention in the matter.
The Committee has asked for sanctioning of the financial package approved by the Board for Reconstruction of Public Sector Enterprises (BRPSE). The Board had approved Rs. 991 crore package, which needs to be finally cleared by the Union Cabinet.
The package includes an interest-free loan of Rs. 300 crore, repayable over the next 10 years with a moratorium of two years and a waiver of government of India loans to the tune of Rs. 283 crore and the approval for writing off Rs. 159 crore in interests up to the end of March 2013.
There has also been a proposal for additional compensation for the use of naphtha, a costly fuel compared to natural gas though natural gas is now being bought by FACT at US$24.5 per mmBtu.
The Action Committee communication said if the revival package was not immediately sanctioned FACT would plunge into trouble with the net worth of the company having eroded seriously. FACT employs 2,800 people directly and another 7,000 people depend on the company indirectly and is the largest fertilizer company in South India catering to the demand for fertilizers in Andhra Pradesh, Karnataka, Tamil Nadu and Kerala.