To expedite formation of joint ventures (JVs) and overseas asset acquisitions by public sector fertiliser companies, the Ministry of Chemicals and Fertilisers has recommended boards of these companies be empowered to take decision independently.
This follows a decision by the ministry to simplify existing guidelines/procedures for public sector units (PSUs) to leverage opportunities to acquire assets overseas in a competitive manner and at a faster pace.
“This is to encourage Indian companies to establish JV production facilities with buy-back arrangements in countries with rich resources of raw materials/feedstock to make up for scarcity of such resources in India,” said official sources.
An official close to the development said a PSU board’s power to take a call would be linked to a specified amount based on the company’s status. Boards of maharatna companies would be allowed to take decisions on projects worth up to Rs 5,000 crore, navratnas up to Rs 3,000 crore and miniratnas up to Rs 2,000 crore. If a project cost was above the limit, the case would be referred to the empowered committee of secretaries and then, to the Cabinet, he said.
Citing the example of ONGC Videsh, the ministry recommended its overseas asset exploration unit, Urvarak Videsh Ltd, be strengthened with more resources, to enter into direct negotiation with mine owners and gas suppliers. The recommendations have been made to the government in the wake of acute scarcity of domestic resources for non-urea fertilisers like rock phosphate and potash.
To avoid competition among Indian companies for same overseas assets, which eventually pushes up the price, the ministry suggested the creation of a centralised agency in public-private partnership mode for co-ordination.
For better pricing of assets, the sources said, it had already been decided by an inter-ministerial committee to leverage lines of credit given to various countries for bargaining and securing concession on pricing while acquiring lease of assets or concessional rights or setting up of projects. Countries that have rich reserves of natural gas and rock phosphate and where India proposes to leverage lines of credit for projects are Ethiopia ($166.2 million line of credit from India), Senegal ($25 million), Mozambique (two lines of credit — $20 million and $25 million), Syria ($25 million) and National Bank of Uzbekistan ($10 million).
Some of the overseas projects top on the government’s agenda are urea projects in Ghana and Indonesia through state-run Rashtriya Chemicals and Fertilizers; acquisition of stake in Belarus-based Belaruskali, one of the world’s largest producers and suppliers of potash; JV for potash exploration in Ethiopia; and long-term offtake arrangement for rock phosphate with Togo, Nigeria, Egypt, Australia, Peru, Argentina and Brazil. The government will also revive talks to set up an integrated fertiliser plant in Mozambique and a JV for either composite ammonia-urea and phosphate or an ammonia-urea project in Algeria. Apart from Oman India Fertiliser Company, a JV of Oman Oil Company and Indian co-operative firms KRIBHCO (Krishak Bharati Cooperative Ltd) and IFFCO (Indian Farmers Fertiliser Co-operative Ltd), no other JV predetermined the price for long-term offtake or gave any price preference, said the sources.
They said talks were going on for proposed JVs — SPIC India-ETA Dubai for urea, KRIBHCO- NWCF for urea and ammonia in Australia, IFFCO- Legend International Holdings for rock phosphate in Australia, IFFCO- Grow Max Agri Corp for Potash in Canada. Other than Oman Fertiliser, the existing JVs are for phosphoric acid and include IFFCO-ICS Senegal, SPIC-JPMC Jordan, Chambal Fertilisers Ltd (CFL)-Tata Chemicals-OCP Morocco, and CFL-Gujarat State fertiliser corporation- GCT-Tunisia.
