TAMIL NADU

No disinvestment plans for Madras Fertilizers: Paswan

The Union Minister for Chemicals and Fertilizers, Ram Vilas Paswan (centre) at the unit of the Madras Fertilizers Limited at Manali, near Chennai, on Sunday. — Photo: Shaju John

The Union Minister for Chemicals and Fertilizers, Ram Vilas Paswan (centre) at the unit of the Madras Fertilizers Limited at Manali, near Chennai, on Sunday. — Photo: Shaju John  

CHENNAI, AUG. 1. The Union Ministry of Chemicals and Fertilizers has no plans to recommend to the Centre disinvestment of the loss-making Madras Fertilizers Limited (MFL). Instead, it wants to make suitable changes to the urea pricing policy, which is proving to be the cause for the loss incurred by the MFL.

Briefing presspersons during his visit to the unit at Manali today, Ram Vilas Paswan, the Union Minister of Chemicals and Fertilizers, said "disinvestment will be our last option ... it is out of question."

Pricing mechanism

Noting that MFL — on March 31 its accumulated loss stood at Rs.206 crores — was mainly suffering on account of the group retention pricing for urea, he said a committee already recommended changes to the pricing mechanism.

The committee, headed by K. Rehman Khan, former Minister of State for Chemicals and Fertilizers until he became the Deputy Chairman of the Rajya Sabha, in its report said the "policy should be changed." Once that happens "this plant (MFL) will be in profit," said Mr. Paswan.

The Expenditure Reforms Commission had recommended the group retention pricing for urea and it is being implemented from April last year.

No to disinvestment

To a query, Mr. Paswan said though the Common Minimum Programme of the United Progressive Alliance was against disinvestment of profit-making public sector units, in MFL's case "we must go into the reasons for the losses."

He pointed out the under-recovery to MFL, which produced four-lakh tonnes of urea last year, was Rs.2,003 a tonne.

A meeting of senior officials of the Ministry and MFL chairman and managing director, Sukumar N. Oommen, in New Delhi next week would discuss the Committee's recommendations.

The Union Cabinet's approval for changes to the pricing mechanism would be sought within two months and the proposed measures would apply to all fertilizer units, he added.

His Ministry was aware of the constraints of naphtha-based fertilizers units such as MFL, Mr. Paswan said and listed measures being taken by it to source natural gas from Oman and Iran.

Mr. Oommen said MFL unit was compatible to be operated on liquefied natural gas too and the changeover could be done at a "small investment of Rs.5 to 7 crores."

He said MFL was a "sound, lean and efficient company" whose employee productivity was on the rise and which met energy efficiency norms.

However, it had been "hurt very badly by the (pricing) policy." The company, which started commercial production in 1971, had a net worth of Rs.175 crores.

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