THE MINISTER OF CHEMICALS & FERTILIZERS (SHRI M. K. ALAGIRI)
(a) to (f): A statement is laid on the Table of the House.
STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (f) OF THE LOK
SABHA STARRED QUESTION NO.19 TO BE ANSWERED ON 02.07.2009.
Out of the nine public sector fertilizer companies under the administrative
control of the Department of Fertilizers, three are sick and are registered with the
Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial
Companies (Special Provisions) Act, 1985. These are Fertilizer Corporation of
India Limited (FCIL), Hindustan Fertilizer Corporation Limited (HFCL) and
Madras Fertilizers Limited (MFL). Out of these three, the units of FCIL and HFCL
are presently lying closed since 2002. MFL has been registered with BIFR as a
sick company since 2007. The details of closed/sick units are as under:-
UNITS REMAINING CLOSED
1. Name of the PSU : Fertilizer Corporation of India Limited (FCIL)
Name of Unit State in Date of shut- Date of Government`s Reason for closure which down of the decision for closure situated unit
Sindri Jharkhand March, 2002 5.9.2002 The parent company namely FCIL was continuously making losses due to variety of reasons such as vintage of plants, technological obsolescence, mismatch of equipment/capacity and lack of investment on upgradation/ modernization
Gorakhpur Uttar Pradesh 1990 18.7.2002
Talcher Orissa 1.4.1999 18.7.2002
Ramagundam Andhra Pradesh 1.4.1999 18.7.2002
Korba Fertilizer Chhattisgarh Never Commi- Not Applicable
Project ssioned
2. Name of the PSU: Hindustan Fertilizer Corporation Limited (HFCL)
Name of Unit State in which Date of Date of Reason for closure situated shut-down Government`s of the unit decision for closure
Durgapur West Bengal 1997 5.9.2002 The parent company viz. HFCL had been continuously incurring losses due to a variety of reasons including obsolete technology, design and equipment deficiencies, power shortages, problems in industrial relations, surplus manpower and resource constraints
Barauni Bihar 1999 5.9.2002
Haldia Fertilizer
Project West Bengal Never 18.7.2002 Commissioned
II. SICK FERTILIZER PSU
Name of the PSU : Madras Fertilizers Limited (MFL)
MFL has only one unit at Manali, situated in the state of Tamil Nadu. The
unit has been continuously making losses but production is being maintained,
although below the installed capacity.
III. PROPOSAL OF THE GOVERNMENT TO REVIVE THE PLANTS
A) Revival of closed units:
Pursuant to the decision taken by the Government on 12.4.2007, the
feasibility of reviving the various closed units of FCIL and HFCL was examined
by the Government, subject to the confirmed availability of gas. The revival of
closed units, based on gas have been found to be economically feasible, under
the New Investment Policy, as per the Techno-Economic Feasibility Reports
(TEFR) for revival of the closed units, as prepared by the Projects &
Development India Limited (PDIL), a premier consultancy organisation in the
fertilizer sector. PDIL had opined that revival was economically feasible provided
the outstanding GOI loans and interest liabilities of the units are waived and the
other dues are settled with the respective creditors. Accordingly, the
Government, on 30th October 2008, considered the proposal of the Department
of Fertilizers for revival of Barauni Unit of Hindustan Fertilizer Corporation
through a Special Purpose Vehicle (SPV), promoted by fertilizer PSUs/
Cooperatives. The SPV would submit a fully tied-up revival scheme for the
closed fertilizer unit at Barauni.
2. The Government also accorded approval for constitution of an
Empowered Committee of Secretaries under the Chairmanship of Secretary
(Fert.) and Secretaries of Deptt. of Expenditure, Deptt. of Disinvestment,
Planning Commission, Department of Public Enterprises and Ministry of
Petroleum & Natural Gas as members, to look into all the financial models for
revival of each of the closed units. The Committee would also look into various
linkages including gas for facilitating revival of the closed units. The Committee
will submit its recommendations including the model for revival of each of the
closed units, to the Government.
3. The Government also accorded in-principle approval for considering write-
off of Government of India loans and interest liabilities of the FCIL and HFCL.
The final decision on waiver will be taken when fully tied-up proposals are
received by the Government.
B) Revival of sick unit of Madras Fertilizers Limited
A proposal for financial restructuring of Madras Fertilizers Limited is under
the active consideration of the Government. The company had appointed M/s.
Deloitte Consultants for suggesting measures and a road map for financial
revival of the company. The report of the Consultants is under examination by
the company. Since the proposal also involves restructuring of the share capital
of the company, the matter is under consultation with the minority shareholders,
viz. M/s. Naftiran Inter-trade Company Limited (NICO) whose response in the
matter is also under examination.
Further, Government has recently approved an amendment in the New
Pricing Scheme Stage-III for urea units which is expected to completely wipe of
the losses of MFL on urea operations and make urea production a profitable
venture for the Company. Similarly, the production of complex fertilizers by MFL
under the Concession Scheme effective with effect from 1st April, 2008 is
profitable. It is, thus, expected that the unit will be able to generate cash
profit in the current year 2009-10.
II). STEPS TAKEN BY THE GOVERNMENT FOR REVIVAL
Pursuant to the decision dated 30.10.2008, an Empowered Committee of
Secretaries (ECOS) has been constituted. As decided by ECOS, technical and financial
consultants have been appointed by HFCL and FCIL for suggesting various feasible options for
revival of these units through brown field fertilizer projects and financing thereof.
The report of the consultants is awaited.
STATUS OF REVIVAL OF TALCHER FERTILIZER PLANT OF FCIL
c) Talcher unit is also one of the eight closed units for which various actions
have been initiated by the Department of Fertilizers and the Companies for
revival as mentioned above.
V. DETAILS OF MODERNISATION PROGRAMME FOR FERTILIZER PSUs.
The modernization programme of the PSUs as informed by them are as follows :-
A. Rashtriya Chemicals and Fertilizers Limited (RCF):
RCF has undertaken revamp of Thal ammonia Plants at a cost of Rs.488.75 crores. The scheme envisages increasing Ammonia capacity to 2 x 1750 MTPD and corresponding increase in Urea capacity from existing 17.07 LMT to 20 LMT per annum.
B. The Fertilizers and Chemicals Travancore Limited (FACT):
Complex Fertilizers: Currently FACT has an installed capacity to produce 6.33 lakh MTPA complex 20:20:0:13 (at Udyogmandal Division and Cochin Divison together). FACT plans to increase the Annual Complex fertilizer production to 10 lakh MTPA by revamping the existing plant at Cochin Division at a total cost of Rs. 200 crore.
C. National Fertilzers Limited (NFL):
The Fuel Oil (FO) Low Sulphur Heavy Stock (LSHA) based urea unit of the company at Nangal, Bhatinda and Panipat are to be converted inot Natural Gas based unit, through an estimated investment of Rs. 4,000 Crore.
