Plan panel wants fertiliser units revived

The National Planning Commission has asked the finance ministry to release funds to modernise six sick public sector fertiliser units in the country. This move could save foreign exchange worth Rs 200 crore annually.


In a letter to the ministry, planning commission deputy chairman Madhu Dandavate pointed out if Rs 200 crore is pumped in for modernisation of the machinery, the country could save substantial foreign exchange by cutting down on urea import.



The NPCs request comes in the wake of several representations made by trade unions, including All India Trade Union Congress, which recently submitted a blueprint for the revival of these units.



Union agriculture minister Chaturanan Mishra recently wrote to fertiliser minister Sis Ram Ola that funds should be released for the revival of sick units.



In an internal note, Mishra indicated out of a total subsidy of about Rs 8,359 crore for fertiliser industry, Rs 2,244 crore was for urea.



As the government spends about Rs 2,000 crore importing urea every year, the same amount could be utilised to revive Hindustan Fertiliser Corporation (HFC) and Fertiliser Corporation of India (FCI).



This would reduce subsidy on urea by 75 per cent, the note stated.



The units that have been identified for revival are HFCs Durgapur, Barauni, Namrup units and Sindri, Ramagundam and Talcher of FCI.



The total annual installed capacity of the five manufacturing units of HFC at Barauni, Durgapur and Namrup I, II, III is 6.53 lakh tonnes of nitrogen.



Its total production was merely 1.26 lakh tonnes during 1995-96 at an average capacity utilisation of 19.2 per cent.



The performance at these units have fallen because of ageing plants and equipment deficiencies.



Hindustan Fertiliser Corporation has been unable to perform due to constant breakdowns. In 1995-96, the company incurred a loss of Rs 466.52 crore while the accumulated loss rose to Rs 3,090.17 crore, including interest of Rs 1720.75 crore on loans taken from the government.



In the case of FCI units, the total installed capacity of Sindri, Ramagundam, Talcher and Gorakhpur units is 5.87 lakh tonnes. In 1995-96, its total production was 2.08 lakh tonnes at 35.4 per cent capacity utilisation.



Following the poor performance at these units, which were largely due to equipment breakdowns, the company incurred a net loss of Rs 426.62 crore in 1995-96.



Both FCI and HFC have already been referred to Board of Industrial & Financial Reconstruction (BIFR) and the operating agency, Industrial Credit & Investment Corporation of India Ltd, worked out a revival package.



Funding arrangements are, however, yet to be tied up fo r both the companies.