Cabinet nod for two state-run fertiliser projects for $1.5 bn

Two fertiliser units at Talcher in north-central Odisha at a cost of $1.5 billion received the cabinet nod Wednesday to primarily augment the domestic supplies of urea, to be jointly executed by four state-run companies led by Coal India and Gail.

The first unit will actually be the revival of a $500-million project a deal for which was signed among Gail, Coal India, Rashtriya Chemicals and Fertilizers (RCF) and Fertilizer Corp of India in 2013 and will now see the technology being finalised by January.

This project will have an upstream coal gasification and gas purification section for production of ammonia sas that will be used by downstream fertiliser unit, an official note said after the deal was signed in the presence of four ministers overseeing the state-run firms.

The second greenfield project, also planned under a pact among the same four state-run companies, envisages an investment of $1 billion and proposes production of 3,850 million tonnes per day of urea, 2,700 million tonnes of ammonia, 850 million tones of nitric acid and 1,000 million tonnes of ammonium nitrate.

"Subsequent to the detailed feasibility study, execution of construction activities is likely to start in year 2015-16 and expected to complete by the year 2019," the official note said.

"Joint Venture - II Talcher Chemicals and Fertilizers shall be led by RCF and will be primarily responsible for setting up ammonia-urea, nitric acid-ammonium nitrate plants at an estimated investment of Rs.6,000 crore with majority stake held by RCF & Coal India," it said.

"The project is of strategic importance for the country, as it aims to make a breakthrough for an alternative source of feedstock in the form of abundantly-available coal from domestic sources," it said.

Government data put the country's total coal reserves at 300 billion tonnes with a recoverable reserve of 173 billion tonnes. "Thus potential exists for converting these reserves into value added products like syn gas for use by fertiliser and power plants at affordable price," it said.

"India is deficit in urea production. Currently, we produce about 22 million tonnes of urea and there is a gap of 10 million tonnes," said Fertiliser Minister Ananth Kumar after overseeing the signing of the agreements with Petroleum Minister Dharmendra Pradhan and Power Minister Piyush Goyal.

"By the time our government completes its first term, India should be self-reliant," he said.

"We are also working on reviving some of the closed fertiliser plants using coal gasification or similar cost effective technologies to increase domestic production of urea. This is make India a net urea exporter by March 2019."

Officials also said the revival of Talcher unit will trigger a great economic boom in Odisha and eastern parts of the country as it will generate fresh jobs and also will give the much-needed urea fertiliser to the farmers in the country.