Date:14/12/2006 URL: http://www.thehindubusinessline.com/2006/12/14/stories/2006121405580100.htm

Back Bad scheduling of fertiliser imports costs PSUs Rs 160 cr in demurrage

Ambarish Mukherjee

Extra costs due to demurrage and transshipment. Unloading was delayed as grain imports were given priority

Paying the price
IPL, MMTC would be paying around Rs 100 cr as demurrage charges to the shipping lines for the Panamax vessels that were chartered.
Close to another Rs 60 crore is likely to be paid for transferring the 1.2 mt of imported urea on to smaller Handymax vessels.

New Delhi , Dec. 13

Fertiliser imports in November have cost the two public sector enterprises, Indian Potash Ltd (IPL) and MMTC, close to Rs 150-160 crore in additional demurrage and transhipment costs as wheat shipments enjoyed a higher priority.

These two companies would be paying around Rs 100 crore as demurrage charges to the shipping lines for the large capacity (50,000 tonnes) Panamax vessels that carried the fertiliser to the Mundra port because of delays in releasing the vessels.

Close to another Rs 60 crore is likely to be paid for transferring the 1.2 million tonnes of imported urea on to smaller Handymax vessels (capacity 30,000 tonnes) that would carry them to the Kandla, Vizag, Tuticorin, Vizag and Mangalore ports.

Unloading delayed

These supplies were booked for the Mundra port through the last global tender floated by IPL and MMTC and were shipped in large vessels.

Their unloading was delayed because grain imports were given priority and the imported fertiliser is now being sent to other ports.

According to domestic fertiliser manufacturers, higher costs were due to poor coordination between the Ministry of Agriculture, Ministry of Fertiliser and Ministry of Finance. According to Government data, however, there is no shortage of DAP and urea.

The Central Government figures up to November 26 show that urea requirement was 24.69 lakh tonnes while the availability was 28.72 lakh tonnes while sales were 15.65 lakh tonnes and the closing stock stood at 13.07 lakh tonnes.

For DAP, the requirement was 12.66 lakh tonnes and availability was 14.01 lakh tonnes. However, sales were 7.42 lakh tonnes and the closing stock was 6.59 lakh tonnes.

This availability figure, however, includes the stocks at ports and railways stations. While the Ministry authorities maintain that the piling up is more to do with the respective State Governments who handle the local distribution system, industry sources maintain that the pile up due to imports that were avoidable.

As per the practice, fertiliser PSUs takes import decisions in consultation with the Fertiliser Minister, and the imports are scheduled in coordination with the Ministry of Agriculture and Ministry of Finance since the purchase decision involves a subsidy element. Industry sources told Business Line that often meetings called by various Ministries with industry representatives are not even attended by representatives of other concerned Ministries though they are part of the decision making process. However, this entire increased amount would be adding to the subsidy bill for the current fiscal, officials pointed out.