NEW DELHI, July 5: The Union Commerce Ministry has turned down the request of the State Trading Corporation (STC) to be allowed to keep off urea imports until the controversy surrounding its recent urea is sorted out. The corporation had decided to keep off the urea import business after it was accused of contracting 2.75 lakh tonne of urea at a price higher than that paid by MMTC Ltd and Indian Potash Limited (IPL). The matter is being probed by the Central Bureau of Investigation (CBI).

Ministry sources said the corporation did not have the option to keep off urea imports because it was a canalising agency. In addition, urea is yet to be decanalised. Though the Fertiliser Ministry has supported the view, a final decision will be taken by the high-level steering committee at the time that they allocate the amounts each agency has to import.

Last week, STC reallocated work to change the director in-charge of team handling urea imports. However, the STC chairman B.K.Chaturvedi described the changes as a routine matter. "The reallocation has nothing to do with the urea controvery created by vested interests. In fact, imports were made purely on the basis of commercial judgement as per the government norms," he added. In the urea deal, STC contracted urea at $117.50 per tonne on FOB, to be imported through three international trading companies. At around the same time, MMTC and IPL contracted urea at $115 per tonne on FOB basis. Later, things took a serious turn when two directors of the corporation refused to sign the contract.

When the matter reached the ministry, STC reacted sharply to the charges, deciding to keep off the urea import business till it gets a clean chit from the Ministries of Fertiliser and Commerce. In fact, the decision was conveyed to the Commerce Secretary P.P.Prabhu and Fertiliser Secretary Anil Kumar. Last year, STC's edible oil transactions had also attracted attention as nearly 75 per cent contracts were given to a Malaysian firm.