GeLoss making public sector fertilizer major Fertilisers and Chemicals Travancore [FACT] is now facing serious crisis as Petronet LNG demands a much higher price for LNG. FACT had switched over to LNG from Naphtha in last September as LNG was cheaper for making Ammonia. Petronet now quotes US $ 24.35 for one unit of LNG, that badly affects even the working of the two units of FACT. The company decided to import Ammonia as for the production all its products Ammonia is essential. A top management official of the company told Business Standard that they had already started the process to import and would place orders by next week. ‘It is cheaper for us to import Ammonia, instead of producing internally using high priced LNG. Otherwise FACT will face serious crisis and all the plants should be shut down, In order to avoid this we go for import on a war footing, he said.
During last September, when the LNG terminal was commissioned at Puthuvype near here, FACT had switched over to LNG as it was a cheaper option for them. Before that the company was using high priced Naphtha as fuel for production of Ammonia. In September Petronet LNG supplied gas at a price tag of US $ 19.5/unit, later in the second shipment it was hiked to US $ 21.5. Now the company asks for $ 24.35 which is not viable to FACT. He told that currently Naphtha is cheaper than LNG as the price is US $ 24 for a unit of Naphtha.
He also said that apart from raising the price Petronet now insists that LNG would be supplied to FACT if it takes one shipment fully. One shipment is 80 million cubic meters of gas. The requirement of FACT for two months is 40 million cubic meters. So FACT will be in serious financial crunch if it agree with the conditions of Petronet and the price hike. FACT recorded a net loss of Rs 300 crore during 2012-13 and having an accumulated loss over Rs1000 crore. The government is seriously considering financial package for the company as the 70 year old PSU is on an all out effort for its existence. The number of employees had been dropped to roughly 3000 from 15,000, two decades back.
The officer told that the company require Ammonia for producing all products including Caprolactum and Factamphose. It produces 75,000 -80,000 tones of fertilizers in a month. Due to a technical snag in one of the boilers of Ammonia plant, the company shut down the plant, three days back. It now requires LNG to re-start the plant, but Petronet is adamant on price and the quantity to be taken. ‘So we have no other option, but to go for import for our survival. We can not switch over to Naphtha immediately. We are now on a very serious crisis and both central and state government should intervene in solving the issue, he added.
Petronet LNG’s Puthuvpe terminal is now utilizing only on 8% of its total capacity as the pipe line on Kochi- Mangalore and Kochi – Bangalore is not set in. The terminal now gives gas to companies in and around Kochi, like FACT and BPCL Kochi Refinery. He also said that FACT would go for an annual shut down during April – May period and it want roughly 40 million cubic meters of LNG for the next two months. For that we can not take one full shipment of LNG, he added.
When Business Standard contacted, Kethrapal, vice president, Petronet LNG told that the price was not increased. Representatives of GAIL, which is marketing LNG in Kerala, are talking with them, but the price is not increased. We will supply gas to them at the rate we are giving to BPCL – Kochi Refinery. We have asked them to inform their requirement in advance so that we can arrange the shipment. We are not insisting for taking full shipment, he added.
