MCFL, two other naphtha plants start production: Kumar

Govt extends subsidy to companies

MCFL, two other naphtha plants start production: Kumar

Vijay Mallya-led UB Group firm Mangalore Chemicals and Fertilisers Limited (MCFL), which is a takeover target of two fertiliser companies, has resumed production after the government notified extension of subsidy for 100 days on production of urea using naphtha as feedstock.

Apart from MCFL, other two fertiliser firms, SPIC and Madras Fertilisers, have also resumed production, following the government’s decision to  continue the payment of subsidy for urea using naphtha as feedstock, Fertiliser Minister Ananth Kumar told reporters here on Wednesday.

The three companies had halted production of urea in October last year after subsidy payments were stopped. The government had stopped the extension of subsidy to naphtha-based urea plants as cost of production of urea was as high as Rs 43,000 per tonne as compared with Rs 18,000 per tonne, using gas as feedstock.

“After the meetings with respective state Chief Ministers and to maintain smooth supply of urea in the country, the ministry decided for extension of subsidy payments to these three firms for the period of 100 days for producing urea from naptha,” he said.

Kumar also said that the Fertiliser Ministry has requested the respective state governments for providing land for a gas pipeline, and GAIL to provide connectivity to these plants at the earliest.

Urea is a controlled commodity and its selling price is fixed at Rs 5,360 per tonne. The difference between cost of production and retail price is paid as subsidy to manufacturers. Pune-based Deepak Fertilisers has been competing with Kolkata-based industrialist Saroj Poddar-led Zuari Group for taking control of MCFL since July 2013.
DHNS and Agencies

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