Farm nutrient maker Madras Fertilizers (MFL) has sought a fresh loan of Rs 350 crore from the Centre for conversion of its fuel base from multiple feedstock to gas.
The Centre, according to sources, is likely to agree to open a fresh credit line to MFL since the company had not sought any financial assistance. The fresh loan would be utilised in shifting the unit?s fuel base to gas.
As per an agreement between the company and the department of fertilisers (DoF), MFL had agreed not to approach the Centre for any further financial assistance after the latter had written off outstanding interest payments. The company approached the Centre for the loan facility since raising of funds from other sources at market rates would prove costly and difficult due to its poor credit outlook, sources said. MFL has been implementing a Rs 220-crore revival package prepared on the basis of a report by consultancy firm Project & Development India, which has been approved by the Board for Reconstruction of Public Sector Enterprises (BRPSE). One key recommendation in the report was the imperative for MFL to shift its feedstock to gas to ensure the company?s long-term economic viability.
BRPSE, in one of its earlier orders, had directed the department of fertilisers to provide gas linkage to MFL. The department, in turn, had already opened talks with authorities to make registered liquified natural gas (R-LNG or LNG procured under long-term agreement) available from suppliers by floating global tenders.
The company needs approximately 12 million metric standard cubic meter per day of gas to fire up its plants. At present, MFL is using naphtha as its main feedstock and its ammonia plant runs on furnace oil to run boilers, high speed diesel in captive power plants and LPG for auxiliary firing in the boilers, and other equipment. Switching over to gas would cut down the operating cost drastically.