Minister seeks six-month extension for MCF

Union Minister for Chemicals and Fertilizers H.N. Ananth Kumar on Tuesday said he has circulated a cabinet note seeking six months’ extension of time for the Mangalore Chemicals and Fertilizers (MCF) to continue with naphtha as the raw material for urea production.

Mr. Kumar, who is overseeing Bharatiya Janata Party’s (BJP) poll preparedness in Maharashtra, told The Hindu on the phone that the government would take a decision on this regard soon. Asked whether the MCF should halt production from Tuesday after the expiry of the September 30 deadline, the Minister did not give a direct reply.

He said earlier too, a deadline was given; but the time was extended because natural gas, which was supposed to be uses as raw material, was not available. Mr. Kumar said he was not aware when the next Cabinet meeting would be held.

Shutdown fears

Meanwhile, officials at the MCF here said they were preparing for shutdown of operations. The factory had not received any indication from the Union government to continue with production using naphtha, an official said. In the event of the Union government not agreeing to bear the huge subsidy, the factory would run in great losses if it continues production, he said.

At the same time, MCF workers have planned a massive demonstration protesting a halt in production in front of the factory premises here on Wednesday.

The previous Union government had directed the factory to replace naphtha with natural gas for production of ammonia and then urea to reduce the burden of subsidy on the government. The earlier deadline of April 31 was extended by six months to September 30.

While MCF has installed required machinery to produce urea using natural gas, GAIL is yet to lay a pipeline from Kochi to Mangalore to transport gas. The actual cost of production of urea per tonne using naphtha is about Rs. 48,000 to Rs. 50,000 while it is sold at Rs. 5,300 a tonne to farmers. Under government retention price mechanism, the Union government directly pays the subsidy to the factory, instead of individually paying to farmers.