DoF, finmin spur over revival of sick fert units

Written by Sanjay Jog | Mumbai, Jul 30 | Updated: Jul 31 2008, 05:37am hrs
There is a face off between the finance ministry and the department of fertilisers (DoF) over the manner in which the sick fertiliser units of Hindustan Fertilisers Corporation (HFC) and Fertiliser Corporation of India (FCI) wiil be revived. The finance ministry, which has already turned down DoFs plea for providing the budgetary support of Rs 7,500 crore for the revival process, has argued that private sector be involved in it while DoF favours involvement of only profit making fertiliser units such as Rashtriya Chemicals & Fertilisers (RCF), National Fertilisers Ltd (NFL) and Krishak Bharathi Co-operative Ltd (Kribhco).

DoF reiterated that an investment of about Rs 15,000 crore for the revival of Barauni, Sindri, Ramagundam, Talcher and Ghorakpur units would be required and it would not be feasible without budgetary support of at least Rs 7,500 crore. The DOF has argued that land use permissions granted to these units by state government make it easier for these units to be revised under the public sector umbrella.

According to sources, The DoF wants only the public sector to be involved whereas the finance ministry wants that no budgetary support be sought from the government. The finance ministry is averse even to the joint venture (JV) route, as a 51% public sector control would entail an investment of Rs 750 crore by a public sector plant in each plant. The fear is that bulk of the government equity of Rs 750 crore will have to be financed from the exchequer given that the public sector companies have said that they dont have the money to put up for revival of the units.

Sources noted that Reliance Industries, which has already announced its intentions to pursue its plans in the fertiliser sector mainly because of the commencement of gas production from KG D6 block from September, may be able to participate in the revival of sick fertiliser units. Sources however, said no decision has so far been taken in this regard.