Allow working of naphtha based fertiliser plants: CM to Modi

As two naphtha-based fertiliser plants in Tamil Nadu have stopped operations with expiry of subsidy period, the state government today requested the Centre to allow them to function till gas connectivity is provided to them.
Expressing concern over the fate of workers and the 'spillover effect' on the state's economy, Chief Minister O Panneerselvam in a letter to Prime Minister Narendra Modi, recalled his predecessor Jayalalithaa's communication to him in June and sought continuance of subsidy for the SPIC and Madras Fertilizer Ltd (MFL) plants at Tuticorin and Manali.
The Cabinet Committee on Economic Affairs had then approved the extension of subsidy to SPIC, MFL and Mangalore Chemicals and Fertilizers Ltd till September 30, till gas connectivity was provided to them, he said.

With the expiry of the extension period, both SPIC and MFL "have closed their operations from 1.10.2014, adversely affecting the livelihood of hundreds of workers," he said.
"I understand that while the two plants have made necessary investments for gas conversion, in the absence of availability of gas and the infrastructure for delivering gas to these two plants, it is impossible for these plants to change over to gas as feedstock. Unfortunately the connectivity is yet to materialise," Panneerselvam said.
The Department of Fertilizers has allotted mostly imported urea to Tamil Nadu for this season, he informed the PM, adding that the "measure to import one million tonnes of urea additionally this year will not achieve the objective of reducing subsidies by closure of Naphtha based plants.

"Further, the state will also face a loss of revenue by way of VAT paid by SPIC and MFL to the extent of about Rs 220 crore per year. The stoppage of production of these two plants will also have a spillover effect on the state's economy".
The Chief Minister said he was informed that the cost differential between gas and naphtha would be practically nil, if "oil marketing companies could supply at Export Parity Prices instead of charging Import Parity Prices along with their margin".
Panneerselvam said: "In view of these factors, I strongly urge you to direct the Ministry of Chemicals and Fertilizers to allow the functioning of the Naphtha based fertilizer plants with the subsidies continued till such time gas connectivity is provided to these units.