Fert Min for continuation of subsidy to closed urea plants
The three plants have been shut for two months after govt stopped subsidy on urea produced from costly naphtha as feedstock
To maintain domestic production of urea in
the country, Fertilizer Ministry will soon move a Cabinet note for
continuation of subsidy to three closed naphtha-based urea plants,
including that of a UB Group firm.
These plants have been shut for about two months after the government discontinued subsidy on urea produced from costly naphtha as feedstock with effect from October 1. A proposal to reinstate the subsidy follows demands from Karnataka, where one of the three plants — that of Vijay Mallya-led UB Group firm Mangalore Chemicals & Fertilisers (MCFL) — is located. The other two plants belong to Madras Fertilizers and Southern Petrochemical Industries Corporation (SPIC).
“Karnataka Chief Minister Siddaramaiah requested for restarting the MCFL, I explained (to) him the subsidy burden as urea’s cost of production using Naphtha as feed- stock is around Rs 40,000 per tonne, whereas in case of gas it is around Rs 15,000 per tonne. We will propose to Union Cabinet to consider this issue,” Fertiliser Minister Ananth Kumar said. “I have also requested the Chief Minister to waive off the VAT on Naphtha so that subsidy could be reduced,” Kumar added.
The gas pipeline infrastructure to MCFL has not been set up yet, prompting Karnataka to demand continuation of the subsidy for the company’s plant.
In August, the Cabinet Committee on Economic Affairs had approved continuation of production of urea from Madras Fertilizers, MCFL and Southern Petrochemical Industries Corporation using naphtha as feedstock for three months ending on September 30.
Kumar said, the proposal would be moved to the Cabinet as the objective is to maintain the present domestic production level of urea in the country. Meanwhile, MCFL is the only fertilizer plant in Karnataka and is takeover target of Deepak Fertilisers and Zuari Group. On October 1, MCFL had informed BSE that the plant has been shut from October this year due to expiry of permission given by the government for production of farm nutrient from high cost feedstock naphtha.
Earlier this week, main promoter Vijay Mallya resigned as director from his group firm MCFL, but no reasons were given. In the battle for control of MCFL, Mallya sided with Zuari group and launched the counter open offer to ward off the takeover bid of Deepak Fertilizers.
After the open offers of both Deepak and rival Zuari-UB group closed on October 20, Deepak Fertilisers’ stake in MCFL increased by about 6 per cent through an open offer to about 32 per cent and inched closer towards rival Zuari-UB group’s combined stake of 38.4 per cent.
These plants have been shut for about two months after the government discontinued subsidy on urea produced from costly naphtha as feedstock with effect from October 1. A proposal to reinstate the subsidy follows demands from Karnataka, where one of the three plants — that of Vijay Mallya-led UB Group firm Mangalore Chemicals & Fertilisers (MCFL) — is located. The other two plants belong to Madras Fertilizers and Southern Petrochemical Industries Corporation (SPIC).
“Karnataka Chief Minister Siddaramaiah requested for restarting the MCFL, I explained (to) him the subsidy burden as urea’s cost of production using Naphtha as feed- stock is around Rs 40,000 per tonne, whereas in case of gas it is around Rs 15,000 per tonne. We will propose to Union Cabinet to consider this issue,” Fertiliser Minister Ananth Kumar said. “I have also requested the Chief Minister to waive off the VAT on Naphtha so that subsidy could be reduced,” Kumar added.
The gas pipeline infrastructure to MCFL has not been set up yet, prompting Karnataka to demand continuation of the subsidy for the company’s plant.
In August, the Cabinet Committee on Economic Affairs had approved continuation of production of urea from Madras Fertilizers, MCFL and Southern Petrochemical Industries Corporation using naphtha as feedstock for three months ending on September 30.
Kumar said, the proposal would be moved to the Cabinet as the objective is to maintain the present domestic production level of urea in the country. Meanwhile, MCFL is the only fertilizer plant in Karnataka and is takeover target of Deepak Fertilisers and Zuari Group. On October 1, MCFL had informed BSE that the plant has been shut from October this year due to expiry of permission given by the government for production of farm nutrient from high cost feedstock naphtha.
Earlier this week, main promoter Vijay Mallya resigned as director from his group firm MCFL, but no reasons were given. In the battle for control of MCFL, Mallya sided with Zuari group and launched the counter open offer to ward off the takeover bid of Deepak Fertilizers.
After the open offers of both Deepak and rival Zuari-UB group closed on October 20, Deepak Fertilisers’ stake in MCFL increased by about 6 per cent through an open offer to about 32 per cent and inched closer towards rival Zuari-UB group’s combined stake of 38.4 per cent.
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