Operations at state-run National Fertilizers Ltd (NFL) may be affected next month if the company does not get Rs 1,200 crore in outstanding subsidy.

Although the government recently paid Rs 1,400 crore to NFL, the company still faces a liquidity crisis due to the high price of natural gas, which is used as feedstock for its three plants at Bathinda, Nangal and Panipat.

NFL buys gas from the market to run these plants and borrows Rs 600 crore a month, or 75 per cent of the cost.

“The company’s operations are under stress due to delayed payment of subsidy but we are in a position to manage it till end of this month. Beyond that, operations are going to take a hit,” a senior NFL official told PTI. If subsidy dues are not cleared by mid-January, NFL will have to scale down operations, he added.

The company had converted the facilities to enable use of gas as feedstock, instead of naphtha, at an investment of Rs 4,000 crore.

“Plants were converted to gas as its prices were lower as compared to naphtha but now gas prices are almost equivalent to naphtha and for these three plants we have to purchase gas worth Rs 800 crore every month,” the official said.

The company buys gas at $23-24 per million British thermal units. NFL pays Rs 200 crore for the gas from internal accruals while it borrows the remainder, the official added.

The company posted a net loss of Rs 25.9 crore in the second quarter of this financial year due to higher finance costs and fuel expenses.

Apart from Nangal, Bathinda and Panipat, NFL operates the Vijaipur I and II plants in Madhya Pradesh, which get gas supplies from the HBJ pipeline.

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