New norms: Fertilizer units face closure

By Our Special Correspondent

NEW DELHI, NOV. 6. The fertilizer industry today warned that the revised retention prices of urea producing units based on new consumption norms will lead to imminent closure of several plants and cripple operations in many others. It estimates a loss of eight lakh tonnes of urea in the five months of the current season which could lead to shortages and impact heavily on foodgrains production.

In a statement issued here, the Fertiliser Association of India (FAI) has pointed out that the reduction in retention prices is ``very steep" especially for the naphtha based plants and ranges from about Rs. 1,000 to Rs. 1,900 per tonne. The gas based plants have also suffered significant reduction in the retention prices.

Sounding a note of gloom, the FAI says the majority of the naphtha based plants affected by the decision face ``immediate" closure. This is because they are required to pay huge sums to the fertilizer industry coordination committee (FICC) for the period since April 1, 2000. For instance, the amount due from Duncans is about Rs. 200 crores from SPIC about Rs. 150 crores from Zuari about Rs. 110 crores and from Mangalore Chemicals and Fertilisers, about Rs. 50 crores. Apart from the cash crunch, at the reduced price realisation, FAI says it will be virtually impossible for them to cover the essential costs.

The industry's reaction is to the notification issued by the Chemicals and Fertilizers Ministry yesterday revising downwards the retention prices of 13 urea manufacturing units with effect from April 1, 2000. This is meant to reflect revision in consumption norms on an interim basis, based on the actual levels achieved during 1999-2000 or the existing level, whichever is lower.

The FAI says the immediate closure of at least four plants - MCF in Mangalore, SPIC in Tuticorin, Zuari in Goa and Duncans in Kanpur - will result in drastic reduction in urea availability during the season. November and December are the peak months for consumption and this can lead to severe shortages since imports may be difficult at such short notice. As a result, the farming community will be adversely affected and foodgrains production will suffer a setback, according to the industry statement.

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Section  : Business
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