Vintage Allowance Disallowed To Old Urea Units

The fertiliser industry coordination committee (FICC) has decided to disallow vintage allowance to old urea units with retrospective effect from July 1, 1997.

Vintage allowance now stands discontinued both on account of capacity utilisation and feedstock consumption norms.

The FICC has asked the fertiliser department to notify the disallowance and allow for recovery from July 1, 1997. The decision is learnt to have been taken at the 97th meeting of FICC.

The move was hammered through in a full FICC meeting by expenditure secretary CM Vasudev despite opposition by industry representatives.

Sources say FICC's view on the issue was the same as that of the expenditure secretary. The committee said the provision with respect to vintage allowance was justified at the time of inception but that did not hold true for the present as the real productivity had shown remarkable improvement.

Sources said that industry representatives did intervene in the meeting to point out that if the 5 per cent allowance was withdrawn, the element of capital-related cost (CRC) would be totally wiped out with respect to old units.

However, Vasu-dev observed that the allowance should have been withdrawn much earlier, especially in the light of the views expressed in the two-member technical committee report which was submitted in August 1995. What was more, most of the units were at capacity-utilisation levels beyond the 100 per cent level.

It was, however, clarified at the meeting that the industry's point about the CRC aspect would be considered separately by the FICC.