Deepak Fertilisers moves HC against stoppage of gas supply

Deepak Fertilizers on Thursday termed the government's decision to stop gas supply to its plant in Maharashtra as ''arbitrary and unfair'', and has moved the Delhi High Court in this regard.

Following orders of the ministry of petroleum and natural gas, GAIL (India) and Reliance Industries Ltd stopped supplying gas to the plant in Raigad district from 6 am on Thursday, Deepak Fertilizers said in a filing to the Bombay Stock Exchange.

"The order of the [oil ministry] MOPNG to stop supply of natural gas to the company has been taken without any prior notice and is arbitrary, unfair and discriminatory," Deepak Fertilisers said, adding that it has approached the Delhi High Court for remedial measures.

The oil ministry, acting on a request from the department of fertilisers, issued orders on 13 May to immediately halt the supply of 0.5 million standard cubic metres of gas a day to the company.

"The department of fertilizers vide letter dated May 1 has conveyed that maximum retail price for nitrogen phosphorus and potassium (NPK) fertilizers under the nutrient-based subsidy (NBS) scheme is free and the manufacturers of NPK can absorb the high cost of ammonia in the MRP, whereas the MRP of urea is fixed and statutorily controlled by the government," the oil ministry said in the order.

The shortage of domestic gas has forced urea manufacturing units to rely on exorbitantly high-priced imported LNG, the cost of which the government has to bear in the form of subsidy.

"The Department of Fertilizers has requested that the supply of gas to Deepak Fertilisers, which is exclusively manufacturing NPK fertilizers, should be stopped with immediate effect and the said quantity of domestic gas may be allocated/shifted to urea manufacturing units, which are facing shortfall in supply of domestic gas or using high-priced LNG, preferably to National Fertilizers Ltd," it said.

In early 2012, an empowered group of ministers headed by then Finance Minister Pranab Mukherjee had put on hold a proposal to suspend supply of KG-D6 gas to the plant of Deepak Fertilisers till 24 May 2012.

The department of fertilizers was asked to calculate the gains made by companies using KG-D6 gas in the manufacture of fertilisers other than urea. The gains made in the manufacture of non-urea fertilizer using cheaper gas were to be recovered from these units.

However, the department of fertilizers has not formulated the guidelines for the same and gas supplies to non-urea fertilizer plants continued for almost two years beyond the stipulation laid by the EGoM.