India reviews $1.2bn Ghana fertilizer unit on losing gas pipeline

24 July 2012 08:08  [Source: ICIS news]

KOLKATA (ICIS)--India will undertake a `comprehensive review’ of  the $1.2bn (€984m) fertilizer proposed project in Ghana following the award of construction of gas pipeline to Sinopec, an official in Department of Chemicals and Fertilizer said on Tuesday.

The project was proposed by the government-owned Rashtriya Chemicals and Fertilizer Limited (RCFL).

The award of gas pipeline to Sinopec on 17 July by the government of Ghana has put a question mark on the 1m tonne/year urea project because committed supply of gas at a concession is critical for the RCFL’s plans over there, the official said.

With long-term funding from China and construction of the gas pipeline by Sinopec, there are apprehensions about the ability of government of Ghana to offer assured gas supplies on concessionary terms and conditions to the fertilizer project, he added.

India’s Ministry of Commerce will once again seek new commitments for gas supply from Ghana and an assurance for early conclusion of gas pricing and supply agreement and the RCFL project will be reviewed based on the response, the official said.

Even though Indian government officials refused to comment on record, it was acknowledged that RCFL’s investment was linked to the gas pipeline bid put in by a consortium led by GAIL Limited, India’s largest gas transportation and marketing company.

GAIL, along with Engineers India Limited (EIL), an Indian government-owned consultancy firm and Punj Lloyd had submitted a bid for the gas pipeline project to the Ghana National Petroleum Corporation.

However, Sinopec piped the latter to bag the project backed by a $800m funding from the Chinese government.

It was expected that a successful bid by the GAIL consortium would have led to early settlement of gas utilization, supply and pricing issues which continued to hold back RCFL investments since it was first announced in 2010, he added.

RCFL is among India’s largest producer of basic chemicals, urea and complex fertilizer with two units located at Thal and Trombay in western Indian province of Maharasthra.

($1 = €0.82)

By: Ajoy K Das
+65 6780 4359

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