Petroleum ministry asks CPCL to resume naphtha supply to MFL

Chennai: Madras Fertilisers Ltd (MFL), which was to be shut down today due to shortage of its feedstock, naphtha, hopes to continue production following the petroleum ministry's intervention on its behalf with Chennai Petroleum Corporation Ltd (CPCL). MFL, which had just two days' supply of naphtha, now plans to continue production.

CPCL, which had been extending credit on supplies of feedstock and fuel, began insisting on cash and carry transaction after MFL's dues increased to Rs90 crore.

However, with MFL going through a cash crunch, and the government delaying payment of urea subsidy, MFL officials had said last week that the plant would have to shutdown if CPCL refused credit.

Officials had pointed out that MFL's financial crunch was not of its own making. Apart from the new fertiliser policy, which they said short changed it on production costs, the government owed MFL over Rs200 crore as urea subsidy under the new policy.