Indian Companies to Invest $6.37 Billion in Revival of Fertilizer Plant

Researched by Industrial Info Resources India (Delhi, India)--In its 11th Five-Year Plan, the government of India has announced the revival of shuttered fertilizer units in the country. The plan includes four units of Fertilizer Corporation of India Limited (FCIL) at Gorakhpur, Ramagundam, Sindri and Talcher, which were closed for almost a decade. FCIL was declared bankrupt due to non-viabilities of operations. However, as per the recent plan of revival, all units are under evaluation.

The Board of Industrial and Financial Reconstruction (BIFR) is reviewing the profile of FCIL. In India, once a company is declared bankrupt, it has to undergo a detailed study for revival, which is performed by BIFR, as all debts needs to be settled and company must be declared clean.

Looking at the current scenario and growing demand for fertilizers in India, the government has nominated Steel Authority of India (SAIL) (New Delhi, India) and National Fertilizers Limited (NFL) (Noida, Uttar Pradesh) to come forward and invest in the revival of the closed Sindri Unit. A joint venture has been formed between SAIL, NFL and FCIL: SAIL Sindri Projects Limited (SSPL), in which FCIL will have an 11% share. The shares for NFL and SAIL have yet to be decided.

The proposal is to set up a new steel mill, fertilizer plant for ammonia/urea, and captive power unit at the Sindri Unit. Total investment is estimated to be $6.37 billion. The plan is to demolish the existing infrastructure and re-build it. Although FCIL has not finished working with BIFR, some activities are going on. Hopefully, the proposed plan will take some shape after the results of the next BIFR meeting, which is expected in August 2012.

The Sindri Unit was a coal-based fertilizer plant, as the state of Jharkand is a coal belt area. So, coal is available and easy to transport. But this also was the major reason FCIL ran into losses, as the operational costs were much higher when compared to natural gas-based units.

New units after revival will be based on natural gas. As per the new urea policy, feedstock availability will be made through Haldia-Jagdishpur pipeline, as confirmed by an official from NFL, who requested anonymity. Feedstock for the captive power unit is yet to be decided, as it may run on coal with the waste heat of process units, or may be on natural gas itself.

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