It calls for a celebration. The arrival of LNG in Kochi heralds incredible transformation of the city and its industries, none more dramatically than the old war horse, Fertilizers and Chemicals Travancore (FACT).

It was more than a generation ago that hundreds of country boats, plying the waters of the Vembanad, brought FACT’s first feedstock, firewood, from the Malayattoor forests.

Long 65 years have passed from the time firewood ruled as king and the arrival of LNG early this week.

Everything has not been hunky dory all along as the company plumbed the depths of financial despair with the volatility in prices of naphtha, the previous fuel for its boilers. Neither does the arrival of LNG promises a smooth ride into the future.

Credited with being the first producer of chemical fertilisers in the country, FACT has gone from firewood to naphtha to LNG with stoic determination in its search for an economically viable feedstock.

The foundation for FACT was laid in 1943. Commercial production began in 1947, the first product being ammonium sulphate, the capacity for which was 10,000 tonnes per year.

And, it was on firewood that the company relied on. FACT is the pioneer in using wood to produce ammonia, the source of nitrogen, one of the major plant nutrients. In fact, FACT’s popular brand of complex fertilizer Factamfos 20:20:0:13 contains 20 per cent nitrogen, 20 per cent phosphorus and 13 per cent sulphur.

Of these, nitrogen is derived from ammonia, phosphorus from phosphoric acid and sulphur from sulphuric acid.

While the volatile price of naphtha threatened to sink the company there was always hope that LNG would be available at comfortable rates.

When discussions about an LNG terminal in Kochi began more than 10 years ago, FACT expected to get the fuel at two dollars per mmBtu. However, the public sector company has decided to buy natural gas for a period of 60 days at the rate of $19.50, nearly ten times the cost it initially visualised.

The expectations of LNG were high as all eyes were on Mumbai High, where LNG was being sourced for $2 per mmBtu.

The company’s calculations focussed on the expected profit it could make with such cheap fuel. The initial estimates put potential profits at Rs. 200 crore a year after switching from naphtha to LNG. The savings on power generation alone could have been Rs. 20 crore a year.

What sharpens the contrast between the dreams and the reality is the fact that consumers in upcountry centres are getting natural gas cheaper. Gas is available from Dahej terminal in Gujarat at $7.5 per mmBtu and Reliance sells gas at $5.


FACT seeks tax waiver on LNG November 28, 2013

FACT to monetise assets to fund projectsDecember 25, 2013

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