Kochi: Public sector Fertilizers And Chemicals Travancore (FACT) is planning to use imported ammonia instead of manufacturing it with costly LNG.
“The cost of imported ammonia is much lower compared to manufacturing it indigenously using costly LNG provided by Petronet,” said a highly-placed source at FACT.
The move comes close to Petronet LNG pricing the next shipment of the natural gas at $ 24.35 a unit. Currently, FACT is paying $ 21.5 a unit for LNG.
The revised price was higher than the price of naphtha which was earlier used by FACT for manufacturing ammonia.
Adding to the burden of the public sector unit was the absence of any subsidy for LNG. It used to get naphtha for an effective price of $ 14 a unit after the subsidy.
According to the source, Petronet also insisted that FACT buy the entire shipment of LNG which comes to 80 million cubic metres.
FACT did not need a full shipment as half of this would meet its requirement for two months. FACT plants would be closed down for annual maintenance after two months and so there was no point it buying the entire lot at such a high price.
FACT was being forced to buy costly imported PNG when the same Petronet was selling the natural gas for just $ 7 a unit in Gujarat. A rise in one dollar for a unit of LNG would result in Rs 50 crore additional annual expenditure for FACT.
Other industrial units in the state were keeping off LNG citing the high price. The government was yet to take a decision on extending a subsidy for LNG.
It may be recalled that the LNG plant at Puthuvype was set up at a cost of Rs 4,500 crore and it started operations last August. Even after four months, the plant was operating below 10 per cent of its capacity owing to lack of demand for LNG from industrial units in the state.
