Govt plan to run FACT through co-op consortium faces hurdles

James Paul
01 September 2003

Kochi: The Kerala state government''s efforts to run Fertilisers and Chemicals Travancore Ltd (FACT), the Kochi-based central public sector unit, through a consortium of cooperatives seems to have run into rough weather with the Indian farmers Fertilisers'' Cooperative (IFFCO) putting forward certain "difficult" conditions for its participation.

IFFCO officials, who visited FACT a few days ago, have laid down conditions including writing off the loan availed by FACT from the central government for commissioning the new ammonia plant.

Another condition is that the state government should rationalise the tax structure for fertilisers, in addition to doing away with the entry tax on petroleum products. There is also a demand that the state government should supply power to FACT at reduced rates.

IFFCO sources say their participation depends on how the state government will respond to these conditions. But FACT sources admit that the ball is more or less back in the Kerala government''s court.

Top sources in the state government say most of these conditionalities will be "too difficult to be fulfilled." However, the government will try "its level best" to avert the proposed privatisation of the company.

The FACT sources point out that conditions like writing off the loan of Rs 600 crore are difficult for the state government to fulfil. What the IFFCO team suggested was import of ammonia by FACT instead of depending on the new ammonia plant, which, according to them, ruined the company''s financial health. The team''s argument was that imports will be cheaper and the company will not be viable otherwise.