How quickly the Union Finance Ministry okays the long-pending revival package for Fertilizers and Chemicals Travancore and at what price natural gas is made available will determine the future of the public sector company, which now stares at a loss of over Rs. 300 crore a year on account of the high cost of fuel.
Every dollar increase in the price of natural gas will involve an additional expense of at least Rs. 50 crore at the current dollar rates for the company, sources said. FACT draws gas at $19.5 per mmBtu from the Kochi terminal. FACT has been paying high prices compared to other fertilizer units in the country, which pay not more than $5.5 per mmBtu.
Favourable gas price and the approval of the revival package would determine the future of the company, sources said. The company authorities have also submitted a Vision 2020 project, involving an investment of approximately Rs. 6,500 crore, to achieve a profit of Rs. 300 crore.
A statement by FACT said all its boilers in the captive power had been running on the new fuel since early September. Fuel switch for the ammonia plant started on September 26 at 80 per cent plant load and the full feed stock changeover was completed by October 5.
The statement said one of the key features of the switchover to natural gas in the ammonia unit was that since natural gas did not contain much sulphur, the pre-desulphurisation unit need not be operated.