State-run Oil and Natural Gas Corporation marked its foray into fertilizer segment by tying up with Chambal Fertilisers and Chemicals (CFCL) for setting up a urea fertilizer plant at Khubal in Tripura.
Both the companies have agreed to form a joint venture company in this regard, in which the Tripura government will hold 10 per cent stake. A memorandum of understanding has already been signed between the three parties in this regard on Tuesday. ONGC and CFCL have also agreed to take forward the tie up to other states also.
According to an ONGC statement, the identification of CFCL as a strategic partner for the venture was through a “transparent selection process” on the basis of their long-standing experience and expertise in the fertilizer sector.
The diversification is part of ONGC’s “Perspective Plan for the year 2030”, based on which the company wants significant non E&P business growth integrated with its mainstay of E&P business. Though the size of the plant was not mentioned, the statement said that a commercial scale urea fertilizer plant having 1.3 million tonne of urea capacity would utilize 2.4 million metric standard cubic metre per day (MMSCMD) of gas and entail an investment to the tune of Rs. 5,000 crore.
“In sequel to setting up of ONGC’s gas based power project at Palatana, Tripura through a JV with the State Government, joint venture fertilizer project augurs well with the development agenda of the state administration and the business growth plans of ONGC and its strategic partner CFCL,” the statement added.
ONGC had discovered significant gas reserves in Khubal under NELP acreage AA-ONN-2001/1, located in the logistically challenging north-eastern part of the state of Tripura, which otherwise would be stranded due to poor marketing and evacuation avenues.
The new Fertilizer Policy 2012 has several enabling provisions to encourage further investments in the urea fertilizer arena. The gas-based fertilizer complex would need allocation of natural gas by the Empowered Group of Ministers (EGoM), for meeting its feedstock requirement. “Since fertilizer ranks topmost in the priority for allocation, the parties are optimistic about getting the requisite gas allocation,” the statement added
The state government has also assured necessary support by way of assistance in creation of infrastructure, availability of water and for evacuation of the fertilizer produced from the project.