NEW DELHI/MUMBAI: Fertiliser companies are still awaiting the
disbursement of subsidies to the tune of hundreds of crores for the
period between October 2007 and March 2008 even as climbing production
cost and constant prices of the key farm input is making matters worse
for the manufacturers.
"The subsidies/concessions due to the industry for the six month
period involves a substantial amount of funds. Of course, we welcome
the approval to the nutrient-based subsidy policy. But that shouldn't
take away the urgency for the government to disburse our dues,"
industry sources said.
The government had issued a notification regarding subsidy payment
about a fortnight ago, but payments have still not been made. While
the Cabinet committee on economic affairs approved the new nutrient-
based pricing policy on June 13, the subsidy policy for di-ammonium
phosphate (DAP), Muriate of Potash (MoP) and NPK fertilisers expired
on March 31, 2008.
High global prices for inputs and finished fertilisers have meant that
the fertiliser firms have had to borrow at high interest rates to fund
import in the absence of continuous flow of working capital to pay
their suppliers.
For example, the projected DAP requirement for the current kharif
season is 40-48 lakh MT, while domestic production is estimated to be
around 19-20 lakh MT.
To meet this imbalance, imports of 29 lakh MT have already been
contracted. However, only 17-18 lakh MT of DAP is expected to arrive
in time for use in this season, thereby leading to a shortage of 5-10
lakh MT, sources said.
The global price of DAP has also gone up substantially. The
international price has trebled from $430 per tonne last year to
$1,350 per tonne. Due to higher reliance on imports, the subsidy on
imported DAP alone works out to be over Rs 12,000 crore. According to
industry sources, imported DAP work out to over Rs 55,000 per tonne at
the point of distribution compared to prevailing imported DAP rate of
the Rs 13,182 per tonne rate fixed for February 2008.
The subsidy payment in the last four years has risen from Rs 15, 779
crore in 2004-05 to an estimated Rs 95,000 crore in 2008-09.
According to an Enam Securities report, the bonds issued to the
companies by the central government are also selling at significant
discount in the market. The cumulative loss to the industry on account
of selling these bonds in the market was more than Rs 100 crore in Q4
of FYO8, the report added.
Several companies have already asked the Centre to make up for losses
in order to ease the severe strain on the liquidity due to additional
borrowings on this count. Chambal Fertilisers, among the top gas-based
companies, recently joined others in petitioning the department of
fertilisers to reimburse it for losses incurred on account of bonds.
The company was issued Rs 383 crore worth of bonds but was unable to
sell them except at a huge discount.
Prior to the approval of the nutrient-based subsidy regime, subsidies
on fertilisers were entirely product-based and available only for
specific products such as urea, DAP, MoP and SSP. Other fertilisers
got no subsidy or had prices fixed with regard to their nutrient
content.
The subsidy bill could be contained over the mid and longer term,
thanks to the switch to a nutrient-based pricing. But for now, since
the Centre has kept the price of nitrogen, phosphates and potash
unchanged rather than increasing the price of urea and decreasing that
of phosphate, the subsidy bill is expected to remain significantly
high.
No comments:
Post a Comment