FACT requests compensation for high-priced natural gas

FACT requests compensation for high-priced natural gas

Fertilisers and Chemicals Travancore Limited has made a submission for compensation for high-priced natural gas used by the company during the period between October 5, 2013 and January 15, 2014.

The Union Finance Ministry was expected to take a call on the request in the coming week. The financially-troubled public sector company had requested about Rs. 140 crore in compensation for the period, sources said.

They said had naphtha been used in place of LNG during the period, the company’s expenditure on the fuel would have been much higher.

Compensation for high-priced LNG for the specified period is among the two key requests that were made by the company recently. The other request was for the Ministry to consider either waiving or turning into equity the Rs. 550 crore repayments on loan and interest. The fertiliser company now pays about Rs. 200 crore a year in interests.

Sources said more than the waiver on loans and interests, the company was looking forward to infusion of the much-needed working capital which could come through the payment of compensation for the high-price LNG for the specified period.

Meanwhile, it is learnt that the two panels – one appointed by the State government and the other by the Union Fertiliser Ministry, is expected to meet in the first week of June to discuss the issue of FACT’s use of land.

The panels have been constituted in the wake of the fertiliser company management turning down a request from the State government for 150 acres of its land for free for setting up a 500-mw petroleum coke-fired power generation facility.

While the FACT management has said that the issue of land had to be settled between the two governments, it has conveyed the message that land cannot not be given up for free.

The meeting of the two panels follows the publication of a recent State government order on FACT land. Company sources described the order vesting rights over 150 acres of FACT land with the State government as “vague”.

The State government-appointed panel comprises the chairman and managing director of FACT and principal secretaries in the departments of Industry and Revenue. The Fertiliser Ministry panel comprises the FACT chairman and managing director, a representative of the Fertiliser Department and two former IAS officers as experts on revenue affairs.


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