01/10/2014
The lone chemical fertilizer factory in Karnataka, Mangalore Chemicals & Fertilizers (MCF) Ltd., closed down its operations on Tuesday on account of the government policy of stopping subsidy to units using naphtha as feedstock for urea production.
The Centre had directed five naphtha-based fertilizer units in the country, including MCF, to switch over to gas as the raw material for production of urea by June 30 and subsequently extended the deadline to September 30. The government had said subsidy would not be paid to these units for using naphtha as feedstock under the New Pricing Policy III beyond the deadline due to high cost of production.
However, the government (GAIL) has not made available natural gas to the MCF even though the unit spent Rs. 305 crore on modernisation and additions to the existing infrastructure for producing ammonia, the base material for urea. MCF officials told The Hindu that it was perhaps for the first time the operations had been stopped due to government policy.
Union Minister for Chemicals and Fertilisers H.N. Ananth Kumar reiterated on Wednesday that the government was committed to resolving the matter and a Cabinet note on extending the subsidy had been circulated.
After getting feedback from Joint Secretary of his department S.K. Lohani, Mr. Kumar claimed that MCF authorities were in touch with the official and had informed him that the closure was for annual maintenance. Mr. Kumar told The Hindu that two other naphtha-based units — Madras Fertilizers Ltd., Chennai, and Southern Petrochemicals Industries Corporation Ltd., Tuticorin — had not stopped production.
MCF authorities, however, rebutted the Minister’s claim by saying that annual maintenance was done in April–May during gas conversion. The present closure was purely because of lack of clarity in the government policy, an official said. MCF would incur Rs. 5-crore loss a day if subsidy was not available and there had been no communication from the government for its representations seeking extension of time. In such a situation, the MCF could not take the risk of continuing with production, company authorities said.
Protest
Hundreds of employees under the banner of MCF Mangala Workers’ Union held a protest demonstration outside the unit on Wednesday. Union president K.N. Suryanarayana demanded that the government continue with the subsidy policy as otherwise it would amount to penalising the MCF for no fault of its. Besides affecting farmers’ interest, the Centre’ decision would also affect the livelihood of over 2,000 families, he said.
Delegation to Centre
Chief Minister Siddaramaiah, who was in Mangalore on Wednesday, told presspersons that he would convene a meeting with the MCF management and take a delegation to the Centre soon, seeking continuation of the subsidy.
