Besides MCFL, two other fertiliser firms -- SPIC and Madras Fertilisers Ltd -- have also resumed production, following the government's decision to continue the payment of subsidy for urea using naphtha as feedstock, Fertiliser Minister Ananth Kumar said today.
The three companies had halted the production of urea in October last year after subsidy payments were stopped.
The government had stopped the extension of subsidy to the naphtha-based urea plants as cost of production of urea was as high as Rs 43,000 per tonne compared to Rs 18,000 per tonne using gas as feedstock.
"After the meetings with respective state chief ministers and to maintain the smooth supply of urea in the country, the ministry decided for extension of the subsidy payments to these three firms for the period of 100 days for producing urea from naphtha," Kumar told reporters here.
He also said that the Fertiliser Ministry has requested the respective state governments to provide land for gas pipeline, and GAIL to provide connectivity to these plants at the earliest.
Urea is a controlled commodity and its selling price is fixed at Rs 5,360 per tonne. The difference between the cost of production and retail price is paid as subsidy to manufacturers.
Pune-based Deepak Fertilisers has been competing with Kolkata-based industrialist Saroj Poddar-led Zuari Group for taking control of Mangalore Chemicals and Fertilisers Ltd (MCFL) since July 2013.
Also Read
Recently, Deepak Fertilisers had said it has sold over 2.6 million shares, representing 2.2 per cent stake, in MCFL.
Post sale, Deepak Fertilisers' stake in MCFL has come down to 29.05 per cent from 31.25 per cent earlier.
At present, UB Group has 21.97 per cent and Zuari Group 16.47 per cent stake in MCFL.