FACT expansion subject to India govt concession on LNG

24 December 2013 06:08 Source:ICIS News

KOLKATA (ICIS)--A $1.31bn (€956m) expansion plan of Fertilizer and Chemicals Travancore Limited (FACT) announced last year will be subject to the Indian government ensuring cheaper feedstock liquefied natural gas (LNG) supplies, a department of chemicals and fertilizer official said on Tuesday.

In a communication to the government the company said that FACT was not getting any financial benefits from converting its existing operations from naphtha to LNG as feedstock and expansion project, owing to high LNG prices, the official said.

The company was securing LNG supplies at $21.5/ mmBtu (million metric British thermal unit) for its plants located in southern India while fertilizer plants in northern India were sourcing feedstock supplies at just $4.20 mmBtu, the official said.

FACT, however, has not mentioned any floor benchmark price which would be attractive for it to launch its expansion project but has sought “assistance and support of the government in securing feedstock at competitive costs”, the official added.

The provincial government of Kerala, where the company’s plants were located, had already granted FACT exemption from 14.5% value added tax (VAT) on LNG supplies received by it for the next five years. It would translate into a cost saving of $2 per mmBtu of  feedstock, a company official said.

According to a project report drawn up last year, FACT, wholly owned by the Indian government, planned construction of a  2,000 tonne/day sulphuric acid plant entailing investment of $52.4m. It also plans a 1,500 tonne /day urea plant for $183.9m, and a 1,000 tonne/day NP (complex fertiliser) for $43.5m.

The complex also includes a 500 tonne/day single super phosphate fertilizer (SSP) plant for $11.8m and a 2,000 tonne /day  ammonia unit. Besides, the plan includes a 3,500 tonne/day urea plant for $890m and a 600 tonne/day phosphoric acid unit for $128.5m.

($1 = €0.73)

By Ajoy K Das