Secures assurance from the Chief Minister

Faced with a crippling loss due to the high input cost on switching over to Liquefied Natural Gas (LNG) as feedstock, the country’s leading fertilizer manufacturing company, Fertilizers and Chemicals Travancore Limited (FACT), is seeking a long-term deferment of value-added tax (VAT) on the fuel.

Emerging from a meeting with Union Minister of State for Food and Consumer Affairs K.V. Thomas, Chief Minister Oommen Chandy and his Cabinet colleagues, and Jaiveer Srivastava, Chairman and Managing Director, FACT, told reporters here on Wednesday that the State government had promised to defer the VAT on LNG, currently levied at 14.2 per cent, for a period of five years.

Mr. Srivastava said the company was incurring a loss of Rs.32 crore a month since it switched over to LNG from naphtha as feedstock. “At 21.5 US $ a mmbtu, the LNG cost is killing us. The situation is forcing us to borrow heavily,” he said.

“Due to discriminatory pricing, LNG is made available to FACT at more than four times the price levied from companies in other parts of the country.” He said the Government of India had assured FACT that it would consider a level playing field for LNG consumers in the country.

Mr. Srivastava said the Union Department of Fertilizers had cleared Rs.8,000 crore revival package for FACT, under a Vision 2020 programme. “Despite running at 108 per cent efficiency, FACT is accumulating losses because of capacity constraints. The revival package includes short-term, mid-term, and long-term projects for resource mobilisation and capacity expansion,” he said.

The proposed projects include capacity expansion of the NPK plant, sulphuric acid unit, and ammonia urea complex at the Ambalamedu plant under the Kochi division.

FACT has also sought assistance from the State government to take up the marketing of Neera manufactured using the technology developed by the Kerala Agricultural University (KAU). Mr. Srivastava said the company had initiated discussions with KAU on using the network of 8,000 FACT dealers across South India to sell the produce made by the pilot plants being set up by the university.

“We propose to market Neera in Kerala in the initial stage and then seek out new markets across the country before venturing out into exports. FACT could also take up manufacturing of Neera in the later phases,” he said.

Mr. Srivastava said the government was also requested to consider glass fibre reinforced gypsum panels manufactured by FRBL (FACT-RCF Building Products Limited) as prefabricated building material in government construction projects. The product had been approved by IIT, Madras. “We have urged the government to make it part of the schedule of requirement for government projects,” Mr. Srivastava added.

  • Loss of Rs.32 crore a month since it took up LNG

  • FACT has sought State aid to market Neera