Ministry For Partial Selloff In Phospatic Units

The fertiliser ministry wants Indian companies setting up fertiliser units abroad to be given financial incentives in the form of tax rebates. It also wants partial privatisation of public sector companies particularly those manufacturing phosphatic fertilisers.

The ministry also wants the state governments to be divested of the authority of managing the special concession scheme for decontrolled fertilisers in order to correct deficiencies in the administration of the special concession scheme for decontrolled fertilisers.

These views have been expressed in the report of the working group on fertilisers for the ninth plan headed by the former fertiliser secretary Indrajit Chaudhary. The group also has two joint secretaries of the fertiliser ministry besides representatives of other ministries and the fertiliser industry.

 

Distortions have crept into the scheme because of informal and unrealistic price control being exercised by the state governments, recurrent under-provisioning in the Union budget and inordinate delays in the release of special concession due to the cumbersome certification procedure followed by state governments.

The scheme should be operated without involving the state government as is being done for urea and preferably by department of fertilisers, ministry of chemicals & fertilisers, the report said.

The group has said that the fertiliser sector should be given priority in the allocation of natural gas. The ministry is in close competition with the ministry of power which is lobbying for a larger quantum of allocation of natural gas for small power plants.

Partial privatisation of the equity of fertiliser PSUs is needed in order to raise resources required for capital injection for the modernisation, revamp, expansion and diversification programmes of these enterprises.

Iffco and Kribhco, need to be allowed a dual status of cooperative companies by making suitable amendments in the Multi State Cooperative Societies Act, 1984 and the Companies Act, 1956. This would enable these societies to raise funds from the capital market, the report has said.

The special concession on phosphatic fertilisers has reached a level where any further increase appears to be insupportable from the budgetary angle. The report has recommended regular gradual increase in urea prices, coupled with at corresponding rise in the minimum support prices of agricultural crops in order to bring about the desired balance in nutrient use.

The group has predicted that the tradeable surplus of nitrogen and phosphate in the form of finished fertilisers is likely to decline sharply in the international market. In the case of potash, while the global surplus will decline significantly, capacity utilisation may be stepped up with increase in demand.

The group noted that there was a significant improvement in the production and capacity utilisation of nitrogenous fertilisers during the eighth five year plan.

Productions of phosphatic fertilisers declined in 1992-93 and 1993-94, as a result of decontrol in August, 1992. The production picked up in 1994-95 but suffered a set back in 1995-96 on account of the inability of the industry to pass on the increase in the cost of imported raw materials and intermediates to the consumers.

With the recent increase in the special concession, phosphate production is expected to pick up in 1996-97, the group said.

The availability of intermediates ammonia and phosphoric acid could become tighter considering the supply-demand scenario which may push up international prices. The availability of rock phosphate and sulphur is likely to be satisfactory.