Continuation of additional compensation to Fertilizers and Chemicals Travancore Limited (FACT), an indigenous manufacturer producing Phosphatic and Potassic (P&K) fertilizers using naphtha as feedstock beyond 30.6.2013 upto 4.10.2013
No: ----- Dated: Feb, 28 2014
Continuation of additional compensation to Fertilizers and Chemicals Travancore Limited (FACT), an indigenous manufacturer producing Phosphatic and Potassic (P&K) fertilizers using naphtha as feedstock beyond 30.6.2013 upto 4.10.2013
The Cabinet Committee on Economic Affairs has approved the continuation of additional compensation to Fertilizers and Chemicals Travancore Limited (FACT) (a PSU under administrative control of the Department of Fertilizers), an indigenous manufacturer producing Phosphatic and Potassic (P&K) fertilizers using Naphtha as feedstock for a period from 30.6.2013 to 4.10.2013 under the Nutrient Based Subsidy (NBS) policy.
The Department of Fertilizers is implementing NBS Policy for the P&K fertilizers w.e.f. 1.4.2010. Under this Policy, a separate additional subsidy was being provided to the indigenous manufacturers (FACT, Madras Fertilizers Limited (MFL) and Gujarat Narmada Valley Fertilizers Company Limited (GNVFC) producing complex fertilizers using naphtha based captive ammonia. This was to compensate them for higher cost of production of Nutrient 'N' (Nitrogen). However, this was applicable initially for a maximum period of two years with effect from 1.4.2010, during which these units were expected to convert to using gas for production of ammonia or start using imported ammonia, a cheaper source of nutrient 'N'.
Considering the fact that some of the reasons for delay in conversion of feedstock from naphtha to gas were beyond the control of the companies, a proposal of the Department for continuation of additional compensation for another two years beyond 31.3.2012 was earlier considered by the CCEA. The period of eligibility for additional compensation was extended to June 2013 in case of FACT, only in view of its preparedness for conversion of its feedstock from naphtha to gas within a definite timeframe. FACT has finally completed conversion to using LNG as feedstock w.e.f. 5.10.2013. Accordingly, continuation of additional compensation to FACT beyond 30.6.2013 and upto 4.10.2013 was required and has now been approved by the Cabinet.
This will compensate FACT for having manufactured and supplied P&K fertilizers to the domestic market by using costlier feedstock prior to conversion to LNG, and enable the company to remain competitive in comparison with other companies using imported ammonia for production of P&K fertilizers.