Bled by Gas, FACT Gasps for Duty Waiver, Fuel Subsidy.

The advent of Liquefied Natural Gas (LNG) terminal at Puthuvype in Kochi was a major relief for the Fertilizers and Chemicals Travancore (FACT) Limited as the company wanted to switch over to LNG to reduce the cost of operations.

The company has made an an investment of `34 crore and `13 cr respectively in converting its ammonia plant and captive power plant boiler facilities from naphtha and furnace oil to Re-gassified Liquid Natural Gas (RLNG).

FACT started using LNG since September 3, 2013. Full-fledged operations commenced on October 5 last year.

In September LNG was supplied at a price of $19.5 per unit, later in the second shipment it was hiked to $21.5 per unit. The latest quoted price for LNG from Petronet LNG Limited, operators of the terminal, was $ 24.34 which was not viable for FACT.

Since the honeymoon with the fuel proved to be a costly affair, the company stopped using it from January onwards (days after the dedication of the Kochi LNG terminal to the nation) and resorted to importing ammonia.

“It is estimated that If the price of LNG is increased by $1, FACT will incur a loss of `50 cr annually. The production cost of ammonia using LNG at a cost of $24 per unit will be `52,000 per tonne. When we import Ammonia the cost is only `32,000 cr per tonne.

Though the landing price of LNG at Puthuvype terminal is $13 per mmBtu, other cost factors such as excise duty, customs duty, service tax, regasification charges, plant factoring and value added tax (VAT) raise the final price of the fuel.

The companies in north India get the fuel at $5mmBtu. This is the major reason why we stopped utilising the fuel,” a FACT official said.

In order to keep the public sector behemoth afloat, the central government has to waive the 51.5 per cent customs duty and the state government should remove the 14.5 per cent Value Added Tax (VAT) on LNG.

The Action Committee wants the central government to reinstate the subsidy system which was there when the company had used naphtha as fuel.

According to them, some promises were made in the past but nothing has materialised so far.

The company employs nearly 3,000 people and is the largest fertilizer company in South India.

FACT had registered a huge loss of `353.96 cr in 2012-13 and the loss in 2013-14 will be somewhere between `200-250 cr.

The expenditure of the company increased from `2041.27cr in 2009-10 to `2487.05cr in 2012-13.

Source : newindianexpress.com