Government unlikely to give loans to loss-making fertiliser PSUs

NEW DELHI: The Fertiliser Ministry is unlikely to give any loan assistance to ailing public fertiliser units -- BVFCL, FACT and MFL -- in the 12th Five Year Plan (2012-17) despite funds set aside for this purpose.


During the last plan period, the government had released over Rs 700 crore loans to these three units for renovation, replacement and maintenance of critical equipment.

Besides this, the ministry had also given FACT Rs 200 crore during 2008-09 as grants-in-aid for sustaining operations.

For the 12th Plan period, the government has allocated budgetary support of Rs 1398 crore to extend financial assistance in the form of loan to Brahmaputra Valley Fertilisers Corporation Ltd (BVFCL), Fertilisers and Chemicals Travancore Ltd (FACT) and Madras Fertilisers Limited (MFL).

However, the Finance Ministry has instructed to the Fertiliser Department for not releasing the plan allocation funds especially to those loss-making PSU units which do not have payback capacity.

"Finance Ministry has given us instructions that loans are to be given to these companies only if they are in a position to pay back, which seems unlikely in near future," a senior fertiliser ministry official said.

The Department has not released any loans so far to these three units in the current fiscal, the official added.

Asked about possible impact of such a step, a BVFCL official said, "Without financial aid from the government, we can run the operations only for one or two years."

After that, the operations could affect badly as units are old and machinery need to be revamped, he added.

BVFCL has two operational fertiliser plants- Namrup-2 and Namrup-3 - with combined capacity of 5.5 lakh tonnes per annum of urea annually but producing less than 3.5 lakh tonnes.

MFL has one plant with capacity of 6.2 lakh tonnes per annum, while FACT has two production units with combined capacity of 5.5 lakh tonnes per annum.