Ministry may quash non-urea subsidy for errant private firms

PSUs have complied with govt order

With private fertiliser producers refusing to slash the prices on non-urea fertilisers in line with public sector firms, the government on Tuesday threatened to cut down the subsidy given to errant firms.

Recently, the Fertiliser Ministry had asked both public and private fertiliser companies to pass on the benefits of falling global prices of raw materials to farmers by reducing the retail price of non-urea soil nutrients.

Accordingly, state-run Rashtriya Chemicals and Fertilisers (RCF) and National Fertilisers Ltd (NFL) reduced the retail price of DAP by Rs 2,500 to Rs 22,000 per tonne, MoP by Rs 5,000 to Rs 11,000 per tonne, while complex fertilisers rates were brought down by Rs 1,000 per tonne. However none of the private players cut the rates so far.

“When international prices of raw material used in making of complex fertilisers have come down by $ 50-70 a tonne, we expect the private firms too reduce the prices and pass the benefits to farmers. If they fail to fall in line, the government will cut down the subsidy given to them. The government has clearly told them this,” a senior Fertiliser Ministry official told DH.

Prices of non-urea fertilisers have recently been reduced for the first time in the last 15 years. DAP, MoP and NPK are decontrolled fertilisers, the maximum retail price (MRP) of which are determined by the manufacturers, while the government offers fixed subsidy every year. Urea price is controlled by the government and its MRP currently stands at Rs 5,300 per tonne.

On an average, the domestic demand of DAP is 100 lakh tonne, MoP 25 lakh tonne and NPK fertiliser 90 lakh tonne. Total subsidy outgo is estimated to be Rs 21,274 crore for complex fertilisers for this fiscal.

The share of complex fertilisers by PSUs is less than 10% while cooperative major IFFCO and private companies Coromandel International, Deepak Fertilisers, Gujarat State Fertilisers and Chemicals Ltd and Tata Chemicals have major share in these soil nutrients.