• IOC to join NTPC, CIL for fertilizer projects

    Indian Oil Corp. is set to join a consortium of Coal India Ltd and NTPC Ltd for setting up three fertilizer factories with a total investment of Rs.200 billion. The investment is expected to help improve the financial health of ailing state-owned Fertilizer Corp. of India Ltd (FCIL), which will provide land for the factories at Sindri in Jharkhand and Gorakhpur in Uttar Pradesh, and that of ailing state-run firm Hindustan Fertilizer Corp. Ltd which will provide land at Barauni in Bihar. The existing production facilities at these places are archaic.

    Coal secretary Anil Swarup said that the petroleum ministry has informed the coal ministry of its support for IOC joining the project. The board of directors at IOC will consider the proposal by the end of July. An email sent to IOC on Wednesday morning remained unanswered at the time of publishing. NTPC had on 17 May said that it has formed an equal joint venture with CIL to set up two urea factories on the premises of FCIL, with provision for a third partner to join in.

    “Now there is a clear roadmap for the project. All the three proposed factories will be operational by December 2020. The joint venture will have a debt equity ratio of 1:3,” said Swarup. The partners together will bring a little more thanRs.60 billion of equity. Each of the natural gas-based factories will require an investment of roughly Rs.65 billion. The project also entails state-owned Gail India Ltd supplying natural gas for the factories by connecting them with its Jagdishpur-Haldia pipeline. Natural gas is a more efficient and cost-effective feedstock for urea production, compared to naphtha, which is used in older fertilizer plants.

    India produces a little over 21 million tons of urea and imports about 8 million tons. Since adverse currency movements and price of the feedstock in global markets influences the import price, the government has been trying to achieve self sufficiency in this plant nutrient. Subsidy is given to companies for selling urea at below their actual cost of import or production, based on their audited sales figures. The government wants to leverage profit-making public sector enterprises in the energy sector to turn around the ailing ones in the fertilizer sector. Reviving the three units is expected to create about 1,200 direct and 4,500 indirect jobs, minister of state for chemicals and fertilizers Hansraj Gangaram Ahir informed Parliament on 4 March. He said a total of 10 defunct fertilizer units will be revived. Zemgus Girgensons Authentic Jersey

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