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Rediff News  All News  » Business » Fertiliser ministry asks for Rs 65,000 cr subsidy

Fertiliser ministry asks for Rs 65,000 cr subsidy

October 15, 2008 15:47 IST

The fertiliser ministry has requested the finance ministry to provide it about Rs 65,000 crore (Rs 650 billion) in supplementary grants for disbursal of subsidies to the manufacturing companies.

"We have sought about Rs 65,000 crore in supplementary budget as the next phase of fertiliser subsidies," Chemicals and Fertiliser Minister Ram Vilas Paswan told reporters in New Delhi on Wednesday.

After receiving Rs 31.83 crore (Rs 318.3 million) as dividend from National Fertilizers Ltd, Paswan said the fertiliser subsidies would be only in cash, and assured manufacturers that there would not be any problems for them.

The Centre subsidises the cost of fertilisers as there is a huge gap between selling price and production cost.

The minster said fertiliser subsidies may fall to around Rs 1,00,000 crore (Rs 1,000 billion) this year from the earlier estimate of Rs 1,20,000 crore (Rs 1,200 billion) because of fall in the global prices of urea and DI-Ammonium Phosphate.

"Had there been no rupee depreciation, we could have saved more," he added.

The Centre had provided Rs 31,000 crore (Rs 310 billion) in the budget 2008-09 as fertiliser subsidy and later made available Rs 22,000 crore (Rs 220 billion) as loan from banks.

"Out of Rs 22,000 crore, fertiliser companies have received about Rs 15,000 crore (Rs 150 billion) and the remaining amount would be given by November 30," he said.

Paswan added he would meet Petroleum Minister Murli Deora next week to sort out operationalisation problems as fertiliser units are yet to get gas on a priority basis as decided by the empowered group of ministers.

The eGoM on gas pricing, headed by External Affairs Minister Pranab Mukherjee has already decided that fertiliser plants would receive gas as first priority. 

Paswan pointed out that the industry is getting only 29 mmscmd gas out of an immediate requirement of 41 mmscmd.

He added that the cabinet will take a decision on revival of Barauni plant, which has been closed since last couple of years.

A senior official said, the fertiliser ministry has sent a proposal to the Cabinet for the revival of the Barauni unit by a consortium of three PSUs -- NFL, Rashtriya Chemicals and Fertiliser and Kribhco.

The consortium named 'Urvarak Videsh Ltd' would invest about Rs 4,000 crore (Rs 40 billion) for reviving the unit, he said. 

Earlier, NFL Chairman and Managing Director G S Mangat said the public sector fertiliser company would invest Rs 5,000 crore (Rs 50 bilion) in next three to four years to augment its capacity and in modernisation.

Mangat said out of that, NFL would invest Rs 3,600 crore (Rs 36 billion) in its three urea units in Punjab and Haryana, which have a combined production capacity of 17.29 lakh tonnes for converting them to gas-based plants.

It would infuse Rs 900 crore (Rs 9 billion) in Vijaipur unit for capacity augmentation and another Rs 500 crore (Rs 5 billion) in Bhatinda and Panipat units.

The total capacity of NFL is 32.31 lakh tonnes of urea and it is producing even more, he added.

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