Gas price hike: RCF to up price by 2-3% next month

The Centre on Oct 18 hiked natural gas price from $4.2 per mmBtu to $6.17 per mmBtu from Nov 1, or about 33%

State-run Rashtriya Chemicals and Fertlizers plans a two-three per cent increase in prices next month to protect the margins, following the 33 per cent hike in natural gas price, according to a top company official.

“For potassium and phosphorus fertilisers, we will have to raise our prices to some extent so that we maintain our margins. ” RCF Chairman and Managing Director R G Rajan told PTI here over the weekend.

When asked specifically about the quantum of increase, he said, “since gas price hike is not as substantial as earlier expectation of doubling the prices, it should be a modest two-three per cent,” he said.

The government on October 18 hiked the natural gas price from $4.2 per million British thermal unit to $6.17 per mBtu from November 1, or about 33 per cent.

On the revenue side, Rajan said the company is eyeing Rs 7,500 crore this financial year, a 10 per cent growth from last financial year due to increased production capacity.Last year our production was 30 lakh tonnes (LT), and this year it will be almost 32 LT”.

“Our turnover last year was around Rs 6,800 crore. This year it should be around Rs 7,500 crore. With the proposed price hike our revenue may go up further. RCF has annual capacity of 2.5 mt of urea and 7 LT of complex fertilisers,” he said.

The public-sector unit, which already enjoys the Miniratna status, is also likely to get the Navaratna status this year once the government appoints the requisite number of independent directors.

“We need to have six independent directors. Right now we have only one independent director. Hopefully, the government will appoint five more directors. Already our case is recommended for Navratna but it is appointment of directors which is stopping us. We hope that this year it should happen,” Rajan said.

RCF plans to set up a subsidiary ‘RCF Videsh’ on the lines of ONGC Videsh, which will specifically focus on ventures and assets abroad.

Asked about his expectation from the new urea policy, he said, “Our expectation is that ultimately we have to go for nutrient-based subsidy (NBS) policy from the present new pricing scheme (NPS). Today, urea is priced so cheap at around Rs 5.3 a kg. It is cheaper than salt, so farmers are using more urea or misusing urea and the NPK ratio is getting distorted.”

Ultimately, the aim is that we should have an NBS policy for all the three nutrients, primary nutrients, so that we have a balanced NPK ratio. That is the ultimate objective, he said, adding, “We hope that the new policy, the government will take this into consideration.”