Govt to give additional Rs 16-cr subsidy to RCF

The government today decided to provide an additional subsidy of Rs 15.95 crore to state-owned Rashtriya Chemicals and Fertilizers (RCF) to compensate it for the higher cost incurred for producing complex fertilisers.

The decision to provide compensation to RCF at revised rates was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Manmohan Singh.

"Due to the revision of rates, there is an estimated financial implication of Rs 15.95 crore for the government," Home Minister P Chidambaram told reporters after the CCEA meeting. The compensation would be given to RCF for the cost incurred in production of two grades of fertiliser between July 2005 and March 2008, he added.

The two grades of complex fertilisers of RCF for which the subsidy has been revised are '15-15-15' and '20-20-0' sold under brand 'Sufala'.

Pointing that the revision in subsidy is a one-time dispensation from the Centre, he said it will be implemented with retrospective effect.

Officials said that these two grades are produced with gas as feedstock for sourcing Nitrogen 'N', which is the main nutrient in urea. Earlier subsidy was based on the price of gas prevailing before July 2005.

However, as the government had hiked the gas price with effect from July 1, 2005, the cost of production by RCF went up, they said.