Company looks to political leaders for support
Fertilizers and Chemicals Travancore (FACT), which received a lifeline with last week’s recommendation for a revival package by the Board for Reconstruction of Public Sector Enterprises (BRPSE), now looks to strong lobbying from State’s political leaders, especially its Members of Parliament, to get the recommendation through the Cabinet Committee on Economic Affairs (CCEA).
Sources said that BRPSE recommended a financial package worth Rs. 990 crore, which would take care of the long-standing government loan and interest thereof, and also bring in some quantum of the much-needed working capital.
They said that the BRPSE recommendation was only a proposal that needed to go through several stages, beginning with the preparation of a Cabinet note by the expenditure section.
However, with political leaders from Kerala occupying key positions at the Centre it should be possible for the proposals to get through the Union Cabinet, trade union sources said here. They pointed out that Defence Minister A.K. Antony headed the Empowered Group of Ministers on Gas Pricing and Allocation and could be a key voice in clinching a favourable deal for FACT.
Sources, however, said that the financial package would just help FACT escape the BIFR net as it appeared headed for a consecutive second poor year in 2013-14. Losses last year amounted to over Rs. 350 crore. The loss during the first six months of the current financial year is over Rs. 190 crore. Despite odds stacked against it, FACT turned up a profit of nearly Rs. 20 crore during 2011-12.
Meanwhile, sources said that the continuing uncertainty over the price of natural gas was holding up clearance for the proposals for expansion and diversification submitted by FACT to the Union Government.
There is no clarity yet on how natural gas will be made available to FACT. The company management said that the price (nearly $20 per mmBtu) at which gas was being bought from GAIL in Kochi was not sustainable for the company.
Either government compensation for FACT at the urea import parity price for gas or a facility to swap imported gas in Kochi for domestic gas available in up country centres through the GAIL network is being looked at now as a solution.
The new proposals submitted by the FACT management include an ammonia-urea complex at Udyogamandal campus of the company. This is the single largest component in the Rs. 7,000-crore worth of proposals. The ammonia-urea complex, envisaged at capacities of 2,800 tonnes TPD of ammonia and 3,500 tonnes of urea, is estimated to cost about Rs. 5,000 crore. A 2,000-tonnes-per-day sulphuric acid plant and a 1,000 tonnes-per-day Factamfos plant are also planned at the Cochin division.
Keywords: Fertilizers and Chemicals Travancore, revival package, Board for Reconstruction of Public Sector Enterprises, Cabinet Committee on Economic Affairs, sulphuric acid plant, GAIL, Defence Minister A.K. Antony