IFFCO cries foul on gas supplies for Kalol plant

The natural gas supply constraint has become a major road block for the world's largest fertiliser cooperative, the Indian Farmers Fertiliser Cooperative Limited (IFFCO), which is expanding its urea making facility at Kalol in North Gujarat. The company fears the delay in gas allocation may cause cost escalation by about Rs 500 crore.

The farmers' cooperative is developing a urea plant at Kalol with an annual capacity of 1.4 million tonnes at the cost of Rs 4,660 crore.

However, for over two years now the farmers' cooperative has been awaiting natural gas supplies from KG-basing to initiate work at its urea making facility in Kalol.

"Due to non-allocation of gas, our expansion has been stalled for over a couple of years now. The delay in allocation is causing our project costs to rise and the country continues to suffer from the urea shortage," said N P Patel, chairman, IFFCO. He further mentioned that IFFCO imported about 4 million tonnes of fertilisers during 2010-11 to meet the domestic fertiliser demand of over 12 million tonnes.

IFFCO's present facility at Kalol consumes 1.2 million metric standard cubic meters per day (mmscmd) and produces ammonia and urea.

At the expanded capacity, the plant would require an additional gas supply of 2.6 mmscmd. According to senior IFFCO officials, the delay in commissioning of the project would escalate the project cost by an additional Rs 500 crore.

"At present, we are buying the gas from Reliance Industries to meet our current requirement. However, the supplies are not consistent throughout the year and we have to purchase gas in the spot market at higher prices. A sustained gas allocation from KG basin would save our cost to the tune of Rs 4 crore per year," informed H D Mistry, sr. general manager of the fertiliser major.

According to senior officials, even as the central government has placed fertiliser industry under the priority sector for gas allocation from KG basin, many fertiliser plants do not get adequate allocation of natural gas as per their requirements.

In an interaction with media on Tuesday, Patel informed that the farmers' cooperative was setting up a barge jetty at Kandla with a handling capacity of around 2 million tonnes of bulk cargos. The fertiliser major currently has a liquid cargo jetty at Kandla port. The new jetty, to be operated thorough a special purpose vehicle under its wholly owned subsidiary, IFFCO Kisan Bazar and logistics Ltd would facilitate company to import solid raw materials and imported fertilisers. The project is estimated to attract an investment of Rs 35 crore.