Fertiliser firms seek Rs.40,000 crore subsidy dues

The fertiliser industry is facing a serious liquidity problem and has requested the government to immediately allocate Rs.40,000 crore to clear subsidy dues for the current financial year.

According to the Fertiliser Association of India (FAI), the government has not paid subsidy dues to fertiliser companies since August.

For the current financial year, the government has made a budgetary provision of Rs.65,971.50 crore for fertiliser. This is nearly the same as Rs.65,974 crore fertiliser subsidy provided in 2012-13.

Director General of Fertiliser Association of India (FAI) Satish Chander said fertiliser subsidy requirement for the current fiscal would be around Rs.1.07 lakh crore. This includes the arrears of Rs.32,000 crore of last fiscal.

Chander said the government should make a realistic estimate of subsidy for the 2014-15 fiscal in the budget, keeping in view the backlog carried forward from 2013-14.

"It is high time the government takes note of the issue and addresses the persistent liquidity problems facing the fertiliser industry," said FAI chairman R.G. Rajan. He added that the liquidity problem has been created due to the delayed payment of subsidy by the government.

Rajan also demanded that the government should make provision for interest on the payments delayed beyond a stipulated time period.

FAI officials were talking to media persons ahead of the three-day annual seminar organised by the association to discuss the issues related the fertiliser industry. The seminar to be held Dec 11-13 in the national capital will be focused on the theme "fertiliser sector at crossroads."

Nearly 1,200 delegates including over 200 foreign delegates from different parts of the world, notably from North America, Africa, Europe and Gulf countries, are scheduled to participate in the event.

Ahead of the annual event, the FAI demanded that policy for existing urea units should be revised urgently to provide at least Rs.700 per tonne increase in fixed cost to compensate for rise in conversion cost which is a part of total fixed cost, with minimum fixed cost of Rs.2,300 per tonne.

"There should be index based increase in conversion cost for the period beyond March 2012," the FAI said.

"There is a need for special allowance of Rs.500 per tonne of urea to units more than 25 years old to enable them maintain their existing production level," it said.

On gas allocation, the FAI said the policy should be revisited to remove the cap imposed on supply of domestic gas to fertiliser sector.

"Marketing margin on gas supplied from KG D6 field be recognised and reimbursed to the industry. This issue is pending for five years," the FAI said.