The Department of Fertilizers will be issuing a notification enabling the naphtha-based urea manufacturers to resume production soon.
The order will benefit at least two firms in the south — Madras Fertilizers Ltd (MFL), and Southern Petrochemical Industries Corporation (SPIC) — which have suspended operations since October 2014. A top official said since they worked in a highly regulated environment, it needed Centre’s permission to produce as well as move the end-product. With the Tamil Nadu Government agreeing to waive the five per cent value added tax (VAT), it was quite natural for the Centre to accord permission. However, it might take at least a week for the firms to resume operations.
The waiver of VAT would amount to a significant reduction in the feedstock prices, coming in the wake of the Centre suspending subsidy for naphtha-based urea makers. The Karnataka Government was yet to announce its stand with regard to waiver of VAT as well as entry taxes, said another official.
Production target From April to September 2014, MFL produced 2.20 lakh tonnes of urea, representing about 50 per cent of its target, while SPIC produced about 60 per cent. It was likely that these firms would not meet their targets as they have lost nearly three months of production. According to sources, MFL has once again sought the intervention of Indian Oil Corporation (IOC) Chairman to supply naphtha at export-parity price by Chennai Petroleum Corporation (CPCL). It is a subsidiary of IOC.
“We have been asked by the Ministry of Petroleum to contact our supplier to decide the new price. As we have not heard from the CPCL, we wrote to IOC chairman,” the MFL official said.
