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The government will save Rs 700 crore annually in subsidy by supplying natural gas snapped from Deepak Fertilisers & Petrochemicals Corp Ltd (DFPCL) to state-owned National Fertilizers for manufacture of urea.
Cheaper domestic gas replacing costlier imported fuel will result in a cut in subsidy bill, the Fertilizer Ministry said, asserting that the move to cut supplies to Deepak Fertilisers' plants in Maharashtra will not result in any shortage of crop nutrient anywhere in the country.
Last month, supply of 0.75 million standard cubic meters per day of gas to Deepak Fertilisers was stopped on grounds that the extant policy allows use of the cheaper fuel for manufacture of subsidised urea and not market priced crop nutrients as done by the private firm.
"It is clarified and stressed that the stoppage of supply of gas will not affect the supply of NPK (complex fertilisers) and other fertilizers to any state in the country including the state of Maharashtra," the Ministry said in a statement.
The Department of Fertilizers (DoF) had sought stoppage of gas to Deepak Fertilisers, as it manufactures nitrogen phosphorus and potassium (NPK) fertilisers, which have been decontrolled.
In the statement, it said all steps have been taken to ensure availability of all fertilisers, including complex fertilisers, during the kharif season in Maharashtra.
"For State of Maharashtra for the Kharif season (April- September 2014), Department of Agriculture and Cooperation (DAC) has projected, inter alia, requirement of complex fertilizers (NPK) as 10 lakh tonnes. Supply plan for the entire quantity has been made," it said.
A top ministry official said DoF has written to the Oil Ministry seeking "gas earlier supplied to Deepak Fertilisers may be diverted to the NFL (National Fertilizers Ltd), a urea manufacturing PSU."
"NFL using domestic gas instead of costlier imported fuel will help save Rs 700 crore in fertilizer subsidy annually," he said.
Explaining the reasons for stoppage of gas supplies to Deepak Fertilisers, he said the government had as a policy decided to limit supply of scarce domestic gas should only be supplied to urea making plants and the supplies to those manufacturing market priced crop nutrient be stopped.
In February 2012, an Empowered Group of Ministers (EGoM) had decided that the gas being supplied to Deepak Fertilisers may not be stopped but the gain it makes from use of low-priced fuel be recovered from the company.
The Department of Fertilizers was given three months to frame guidelines for recovery of the undue gains but the same was not implemented and now it has been decided to stop gas supply to Deepak Fertilisers, he said.
