India to invite bids by September to revive closed fertilizer units

20 June 2012 08:36  [Source: ICIS news]

By Ajoy K Das

KOLKATA (ICIS)--India’s Department of Fertilizer will invite competitive bids and expression of interests (EoIs) by September 2012 from investors for revival of seven defunct government-owned fertilizer production plants, an official said on Wednesday.

The total installed capacity of the units is 2.28m tonne/year.

The Indian government has set a target of creating additional 10m tonne/year urea production capacity by 2016.

But since greenfield projects will have a longer gestation period, implementing plans for revival of the closed units will increase urea availability in the short term, the official from the department said.

While notices inviting investors will be issued in September, the department of fertilizer hoped to complete the process by March 2013, he added.

The government would facilitate allocation of gas required for revival of the plants, according to the official.

Two closed fertilizer plants at Talcher in eastern Indian province of Orissa and Ramagundam in Andhra Pradesh in southern India, under the erstwhile Fertiliser Corporation of India Limited (FCIL), will be awarded for revival through the `nomination route’ based on Expression of Interest (EoI) submitted by the investors.

Two other plants of FCIL located at Gorakhpur in Bihar province and Korba in Chattisgarh along with three production facilities under erstwhile Hindustan Fertiliser Corporation Limited (HFCL) will be awarded for revival through competitive bids.

The three units of HFCL were located at Durgapur and Haldia in West Bengal and Barauni in Bihar.

All the government owned fertilizer plants were forced to close operations in 2002 owing to shortage of feedstock, financial crunch and government’s reluctance to offer financial support through budgetary allocations.

For the revival of Talcher and Ramgundam fertilizer plants through the nomination route, the department of fertiliser will follow the model adopted earlier for awarding the closed Sindri fertilizer plant of FCIL to Steel Authority of India Limited (SAIL).

SAIL was nominated for reviving the Sindri plant, last year, after the latter committed to invest $6.80bn (€5.37bn) in the project.

The revival plan proposed by SAIL - India’s largest integrated steel producer - included construction of a new 1.5m tonne/year urea plant in collaboration with government-owned National Fertiliser Limited (NFL). The original plant is to be dismantled later.

SAIL will also be constructing a 5.6m tonne/year steel production facility with 1,000-MW (megawatt) captive power plant on the surplus land available at the fertilizer plant site.

Indian fertilizer demand was forecast to rise 4% in 2012-13 to 61m tonne and urea consumption pegged at 32 m tonne of which around 10m tonne will have to me through imports.

($1 = €0.79)

By: Ajoy K Das
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