Spic to import regasified LNG for Tuticorin plant

The plant currently uses naphtha as feedstock

Fertiliser major Southern Petrochemical Industries Corporation Ltd (SPIC) is planning to import regasified LNG or use gas bullets instead of naphtha as feedstock to meet the government’s deadline of September-end. The government had earlier set July 31 as deadline for naphtha-based plants to switch to gas.

At the annual general meeting here today, Ashwin C Muthiah, chairman, Spic, said the Centre had extended the timeline for the payment of subsidies to naphtha-based plants till the end of September. The operations of Spic’s urea plant beyond this month would entirely depend on the government’s decision to continue subsidies to these units.

Stating the petroleum and natural gas ministry had indicated an availability of 0.99 mmscmd of gas from the Ramnad basin to Spic, he said this would help them significantly once connectivity was established between the two. “We are expecting, based on assurances given by various agencies, that the Ramnad-Tuticorin section of the pipeline will be completed by 2015,” he added.

The company is also working on alternative arrangements, including importing regasified LNG (RLNG) or gas bullets, to sustain the operations of the plant till gas becomes available through this pipeline.

Urea production at the company’s plant in 2013-14 was 286,000 tonne as against 482,000 tonne a year ago. The decrease in production was because of working capital constraints and raw-material shortage, leading to plant shutdown of 207 days in the year, said Muthiah, adding the company was looking at options to augment the working capital requirement to enable sustained operations.

On financials
Muthiah said the company had exercised the pre-payment option and effected final payments by March 2014 to all the remaining creditors, leaving it with no further liability on the account. “This will result in better working capital management and improved overall performance,” said Muthiah, who also said the promoters had infused Rs 28.35 crore by way of loans for meeting the pre-payment obligations.

Arising out of the above settlement, a sum of Rs 91.58 crore was settled to the creditors in line with the scheme. Consequently, a sum of Rs 116.92 crore being the excess liability has been written back during the current year as an exceptional item. The Trust Deed executed in January 2013, by the company to create charge in favour of such remaining creditors on the Specific ed Assets through the Trust was terminated effective March 2014, consequent to payment to creditors in full as per the scheme, according to the company's annual report.

It may be noted the company had a liability to the tune of around Rs 3,000 crore and it has been paying back the money by selling its assets, stake and through promoters infusion.