Fertiliser Ministry wants the natural gas snapped from Deepak Fertilizer to be supplied to state-owned National Fertilizer Ltd (NFL) for manufacturing urea.
Last month, Petroleum ministry acting on a request from the Department of Fertilizers (DoF) had stopped supply of 0.75 million standard cubic meters per day of domestic gas being supplied to Deepak Fertilisers on grounds that the private firm was using the cheaper fuel to manufacture market priced crop nutrients and not subsidised urea.
DoF last month wrote to Petroleum Ministry saying the "gas earlier supplied to Deepak Fertilisers may be diverted to the NFL, a urea manufacturing PSU, immediately".
The department noted that the NFL requires at least 2.8 mmscmd of gas for its three units at Nangal, Panipat and Bhatinda which have been shifted from using fuel oil to gas.
Also, its Vijaipur plant needs 0.4-0.7 mmscmd of gas, which currently is being made up by buying costlier imported LNG, it wrote adding 0.75 mmscmd of gas taken away from Deepak can be supplied to the NFL plants.
The DoF had asked to stop domestic gas to Deepak Fertilisers, as it manufactures nitrogen phosphorus and potassium (NPK) fertilisers, which have been decontrolled and falls Nutrient Based Subsidy (NBS) scheme.
The cheap domestic gas is meant for urea, as its price is fixed, DoF had argued.
"Owing to the shortfall in the supply of domestic gas, the urea manufacturing units have to rely on exorbitantly high priced imported LNG, the cost of which the government has to bear in form of subsidy. So we have requested for domestic gas to NFL," a source said.
Last year, NFL had converted its three urea manufacturing units one each at Panipat, Nangal and Bathinda to use gas as feedstock from fuel oil with an approximate cost of Rs 4,000 crore.
Meanwhile, NFL Chairman and Managing Director Neeru Abrol said, "We have written to the Fertiliser Ministry for allocation of domestic gas."
Natural gas accounts for as much as 65 per cent of urea production costs in India.
Abrol added that as per their estimates if domestic gas was not provided to them the subsidy bill will rise substantially.
NFL, a mini-ratna PSU, has five fertiliser units, including two in Vijaipur and one each in c, with a combined capacity of 3.6 million tonnes of urea. It also manufactures bio-fertilisers and trades in seeds, pesticides and industrial chemicals.
