Time for reviving and modernising fertilizer PSUs and not disinvestment, says Parliament Panel

The Parliamentary Standing Committee on Chemicals and Fertilizers has disagreed with the decision of the Finance Ministry to categorise the fertilizer sector as ‘non-strategic’ for the purpose of disinvesting government stake in central public sector fertilizer companies. Instead, it wanted the government to focus on reviving and modernizing the operations of Central PSUs in the fertilizer sector, before monetizing it through disinvestment.

In its report presented to Lok Sabha on August 20, the Committee wanted all nine fertilizer PSUs to be considered as national assets vital to India’s food sovereignty, climate resilience and rural economy.

Of the nine central PSUs in the fertilizer sector, all four listed companies – National Fertilizers Ltd , Rashtriya Chemicals and Fertilizers Ltd , Fertilizers and Chemicals Travancore Ltd (FACT) and Madras Fertilizers Ltd – are profitable entities. Among the unlisted ones, FCI Aravali Gypsum Minerals Ltd and engineering, consultancy and execution company Projects and Development India Ltd are profitable while Brahmaputra Valley Fertilizer Corporation Ltd is loss making. The remaining two companies – Hindustan Fertilizer Corporation Ltd and Fertilizer Corporation of India Ltd – are not operational at the moment.

The Department of Investment and Public Asset Management (DIPAM), the nodal agency of the Finance Ministry on disinvestment, had classified fertilizer sector as “non-strategic” under the New Public Sector Enterprise (PSE) Policy despite multiple submissions made by the Department of Fertilizers to highlight the sector’s critical role in ensuring food security, sustaining rural livelihoods, and advancing national self-reliance. DIPAM’s argument was that fertilizer PSUs contribute only 25% and 11% of the country’s urea and non-urea fertilizer production, respectively, many were loss making and that their continued existence was inconsistent with fiscal prudence and the criteria for strategic classification, as approved by the Cabinet Committee on Economic Affairs (CCEA) under the New PSE Policy.

The Parliamentary panel said this reasoning was incongruent with the government’s plans for a Atmanirbhar Bharat. Contrary to DIPAM’s claim, several fertilizer PSUs have shown remarkable turnaround, notably FACT, which has transitioned from a loss-making entity to a consistently profitable enterprise, the Committee noted. The Committee also pointed out that the revival of closed units at Gorakhpur, Sindri, Barauni and Ramagundam through CPSE-led joint ventures, has added over 76.2 Lakh Metric Tonnes (LMT) to India’s annual urea production capacity as an example of the strategic value of leveraging PSU assets to meet national goals.

The Committee wanted the government to continue to make efforts to revitalize the fertilizer sector by ensuring adequate support for modernization, technology upgradation, and capacity expansion of fertilizer PSUs.