India seeks foreign partner for coal gasification to revive fertilizer unit

30 October 2012 08:07  [Source: ICIS news]

By Ajoy K Das

KOLKATA (ICIS)--India will seek foreign investors to build a coal gasification and purification plant as a feedstock source for  reviving a defunct fertilizer facility in eastern India, a senior official in Ministry of Chemicals and Fertilizer said on Tuesday.

“The collaborator for the coal gasification plant would be chosen through a global tendering process and scheduled to be completed by January 2013,” the official said.

“The plant [at Talcher in coastal province of Orissa] would be equipped to convert 5.5m tonne/year of coal to be supplied by Coal India Limited (CIL), one of the principal promoters for revival of the defunct Talcher fertilizer plant,” he said.

The government has approved a fresh investment of $1.58bn (€1.23bn) to revive the fertilizer plant including capital costs as per detailed project report prepared by CIL, the official said.

“Since coal gasification technology and project implementation were still at a very nascent stage in the country, the feedstock plant would be awarded to a prospective collaborator on build-own-operate (BOO) basis,” the official added.

A special purpose vehicle (SPV) comprising CIL and Rashtriya Chemicals and Fertilizer Limited (RCFL), both majority owned by the Indian government has been mandated for reviving the Talcher fertilizer plant to produce 1.5m tonne/year of urea and 1,000 tonne/day of ammonium nitrate, using coal gas as feedstock, the official said.

The Talcher fertilizer plant, an asset owned by government-owned Fertilizer Corporation of India Limited (FCIL) was closed down in 2002 following acute shortage of feedstock and poor financial health of FCIL.

“Tenders seeking vendors for setting up the urea and ammonium nitrate plant would be floated within the next three months, since the government has fast tracked revival of the fertilizer project,” the official said.

Explaining the rationale of implementing the coal gasification plant on a collaborative BOO basis, the official said that India was still at a very early stage of converting coal into gas both in terms of technology and project implementation with only one project underway by Jindal Steel & Power Limited in Orissa.

Incidentally, China had 50 coal gasification plants in operations, the official pointed out to underline the point.

The revival of Talcher fertilizer plant was part of a comprehensive plant finalized by the Indian government to add 3m tonne/year of urea production to current production of 22m tonne/year through fresh investments in closed down fertilizer production facilities.

Apart from Talcher, FCIL’s closed fertilizer production facilities are located at Ramagundam in southern Indian province of Andhra Pradesh, Gorakhpur in Bihar and Korba in Chattisgarh.

The other three closed units under Hindustan Fertilizer Corporation Limited (HFCL) are located at Durgapur and Haldia in West Bengal and Barauni in Bihar.

All these plants closed down around 2000 owing to shortage of feedstock and financial ailments.

($1 = €0.78)


By: Ajoy K Das
+65 6780 4359



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