RCF drops plan to set up $1 bn fertiliser plant in Ghana

Ghana has denied assured supply of gas for the plant as power generation is priority for them as compared to fertiliser production

State-run Rashtriya Chemicals and Fertilisers (RCF) has shelved its plan to set up a fertiliser plant in Ghana with an investment of about $1 billion as the West African nation has denied assured supply of gas.

In 2010, India and Ghana had signed a Memorandum of Understanding (MoU) to set up the urea plant with initial capacity of 1.2 million tonnes per annum at Shama district in western Ghana.

Both the countries had to identify one company from each side for executing the project. RCF was nominated by the Indian government to participate in the project.

In June last year, an Indian delegation led by senior fertiliser ministry officials and RCF officials had visited Ghana to discuss the gas supply and pricing issue.

"Ghana government has denied assured supply of gas for the plant giving the reason power generation is priority for them as compared to fertiliser production," an informed source said, who declined to be identified.

"So, we are shelving this project," the source added.

Ministry sources also confirmed that the project could not take off as there was no assurance about the gas supply from Ghana government and also the gas price was not offered.

The project for long was stuck on the issue of assured supply of gas, and cheaper gas was the main reason for which RCF was eyeing this project, source said.

RCF has annual capacity of 2.5 MT of urea and 7 lakh tonnes of complex fertilisers.

The domestic urea production in the country is stagnant at

22 million tonnes (MT) since 2007-08, while the current demand is about 30 MT. The remaining 8 MT is met through imports.

After the successful implementation of IFFCO's urea plant in Oman, Indian government and fertiliser companies are eyeing offshore ventures where the gas is comparatively cheaper to met the domestic urea demand.

Natural gas accounts for as much as 65% of urea production costs in India.

No new urea capacity has been added in India in last almost 13 years.