Fertiliser body says cash crunch, policy delay may add to shortage

[K.Karthik Raja]

Fertiliser body says cash crunch, policy delay may add to shortage
Wednesday, Jun 25

NEW DELHI - Companies are finding it difficult to continue
production and import of potash and phosphate fertilisers in the wake
of a liquidity crunch and delay in approval of the new fertiliser
policy, which may aggravate the supply shortage, the Fertilisers
Association of India said.
Many parts of India are already facing an acute shortage of di-
ammonium phosphate--a key phosphate fertiliser used before sowing
kharif crops.
Fertiliser companies are facing a liquidity crunch due to delayed
subsidy payments, making it difficult for them to continue operations,
the Association said in a statement.
"The liquidity position of the companies has reached a stage
beyond which it will not be possible for them to continue with import
and production of fertilisers in the country," it said.
It said the outstanding subsidy bill of fertiliser companies stood
at
80-100 bln rupees at the beginning of the current financial year to
March, and is seen rising to 280-300 bln rupees by Jun 30.
Government subsidy accounts for about 85% of the total realisation
of fertiliser companies.
In India, the retail price of fertilisers is fixed and the
government
reimburses the difference between the production cost and sales price
to fertiliser companies.
The government's fertiliser subsidy bill has been rising due to a
sharp increase in input costs. The government last year gave bonds
worth 75 bln rupees to fertiliser companies as subsidy.
The Association said the bonds are being sold at a discount of
11%, and fertiliser companies are "not in a position to absorb this
loss".
It said the delay in the approval of the potash and phosphate
policy is also adding to the industry's problems.
The policy would indicate the cost of raw materials and finished
products that the government will recognise for making subsidy
payments.
The previous policy had lapsed on Mar 31, and the government is
yet to finalise the policy for the current financial year.
The association said it has urged the government to announce the
new potash and phosphate pricing policy at the earliest, make timely
subsidy payments and ban export of key inputs such as phosphoric and
sulphuric acid to help the industry.