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Reviving mrup Fertiliser

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  24 May 2015 12:00 AM GMT

With the Union cabinet clearing the decks to revive the mrup Fertiliser plant, the rendra Modi government has fulfilled a promise made in the run up to the Lok Sabha elections last year. The plant had begun commercial production with a single unit on New Year’s Day in 1969, ushering much hope in agrarian Assam. In the next 18 years, it added two more units though the first unit closed down in 1986. Despite the high demand for fertiliser in Assam and farther in West Bengal, Bihar, Jharkhand and Odisha, the production capacity of the plant dropped at an alarming rate. The cost of production at the two ageing units went up considerably, with one unit operating only at half capacity. The ailing plant has been producing around 3.6 lakh metric tonnes of urea annually, far below its optimum capacity of 5.55 lakh metric tonnes. There has been a long-standing demand by various organisations including the AASU, for setting up a fourth unit. In 2006, the then Union Fertilizer and Chemicals minister Ram Vilas Paswan even announced in mrup that a fourth plant will be set up at a cost of Rs 2,500 crore. But then the proposal stalled before a techno-economic feasibility report for installation of a fourth ammonia-urea unit was forwarded to the Planning Commission in 2011.

Since the Brahmaputra Valley Fertilizer Corporation Limited (BVFCL) had already become a loss-making company, the Planning Commission was reluctant to provide funds for the fourth unit, instead advising the Central government to explore the possibility of open bidding and invite equity participation from private sector companies. The process of restructuring the plant was at last initiated in 2013, but the UPA government did not get far. Filly the rendra Modi government has decided to effect this much-delayed restructuring of BVFCL which includes waiving off its interest burden on loans taken from the Indian Government. The fourth unit at a cost of Rs 4,500 crore will be set up as a joint venture through public-private partnership (PPP) route, with 48 per cent equity in the hands of Oil India Limited (OIL), BVFCL and Assam Government. The remaining 52 per cent will be held by private-public sector entities to be roped in through a bidding process. The idea is to make mrup Fertiliser stand and deliver as a competitive company, to produce a targeted 8.64 lakh metric tonne fertiliser yearly. This is good news for paddy, tea and other crop cultivators in Assam and nearby client states, apart from helping the Central government save in subsidy for transporting fertiliser to this region.

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