Statement to be made by Shri Surjit Singh Barnala,  Minister  of Chemicals  &  Fertilizers in Rajya Sabha on17.12.98 in response to  the  Calling  Attention   Notice  tabled  by  Shri   Dipankar Mukherjee  and   other  Members  on  revival of the sick units of Hindustan   Fertilizer  Corporation  Ltd.(HFC)   and   Fertilizer Corporation of India Ltd.(FCI).

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The situation prevailing in the sick fertilizer undertakings under the administrative control of the Ministry of Chemicals & Fertilizers has time and again engaged the attention of this august House. I fully share the concern of the honourable members and feel that an early decision is required regarding the fate of these units of HFC and FCI.

2. The revival packages formulated in April 1995 for the rehabilitation of HFC and FCI envisaged the limited revamp of their functional units. The revamp of Haldia Project of HFC was not found to be techno-economically viable. Similarly, the revamp of Gorakhpur unit of FCI was not found feasible as it would have entailed the setting up of a new ammonia/urea plant. The requirement of fresh investment for revamp of the functional units of HFC and FCI was estimated at Rs.465 crores and Rs.1736 crores, respectively. These revival packages could not be implemented for want of funding tie-up.

3. An Expert Group under the leadership of Industrial Credit & Investment Corporation of India Ltd.(ICICI) was thereafter constituted to reformulate the revival package from the standpoint of funding by Financial Institutions (FIs). The Expert Group has put the requirement of fresh investment for the revamp of Sindri, Ramagundam and Talcher units of FCI at Rs.2638 crores and that for the revamp of Namrup, Durgapur and Barauni units of HFC at Rs.869 crores. In addition, various other financial reliefs and concessions in terms of write off of GOI loans and accumulated interest aggregating to Rs.5006 crores are envisaged to make these packages viable.

4. On the basis of the Expert Group which submitted its report in February'97, the Government considered the revival proposals and fresh proposals were submitted in July/August,97 for consideration of the Government. The Government decided in October'97 on the revival package in respect of Namrup units of HFC. The consideration of the proposals in respect of the other units of HFC and FCI was deferred.

5. The revival proposal in respect of the Namrup units of HFC involves an estimated fresh investment of Rs.350 crores with a term loan component of Rs.156 crore from FIs and Rs.194 crore as budgetary support. The ground work for implementation of the revival package has been expedited. The company has addressed the problem of gas supply limitation and has made necessary arrangements with OIL/GAIL for augmentation of the gas supply to the level of 2.17 mmscmd, which would enable the Namrup Units to attain a satisfactory level of capacity utilisation. The company has awarded the Engineering, Procurement and Construction (EPC) Contract to Projects Development India Limited (PDIL) on 2.11.98 on a single point responsibility basis.

6. On account of the budgetary constraint and technology as well as feedstock related issues which also act as a serious constraint, it has not been possible to take a final decision with regard to the rehabilitation package for both the HFC & FCI.

7. Revised comprehensive rehabilitation proposals in respect of the remaining units of HFC & FCI have been reformulated and are presently under inter-ministerial consultations. As both the companies stand referred to the BIFR, further action would have to be taken after the Government's decision according to the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985.

8. It may, however, be mentioned that the Government has been providing budgetary support for meeting essential capital expenditure and operational requirements of HFC and FCI.

9. Given the magnitude of the fresh investment and other reliefs required, a due diligence exercise having bearing on the multiple dimensions of the issue has been undertaken in the Government. The Government is committed to bring about an expeditious and judicious decision of this complex issue in the overall national interest.