Govt looking for partner to set up Rs 5,000-cr urea plant in Iran

India revived its plans after Iranian authorities approached officials and evinced interest to partner with them in the project

The government is scouting for an Iranian partner to set up a fertiliser plant entailing investment of over Rs 5,000 crore in the Persian Gulf nation.

India revived its plans after Iranian authorities approached the government officials and evinced interest to partner with them in the project.

India had nominated state-run Rashtriya Chemicals and Fertilisers (RCF), Gujarat Narmada Valley Fertilisers & Chemicals (GNFC) and Gujarat State Fertilisers Corporation (GSFC) for the proposed 1.3 million tonnes urea plant.

"Now the government is looking for an Iranian partner to be part of this project. And therefore a senior delegation from India will visit Iran next month," a source said.

The proposal is to set up a urea joint venture plant at Chahbahar in Iran, using natural gas as feedstock, which is abundant in the country.

"Indian government officials have conveyed to the Iranian authorities that they are looking for a long-term gas contract at feasible rates for producing urea," the source said.

Earlier, Iran authorities had indicated gas price of USD 2.9 MMBtu.

Both nations have been talking to each other since 2013, for setting up of a fertiliser plant in the Persian Gulf nation, but talks were stuck over gas price issue.

The proposed urea joint venture plant in Iran would be on the lines of OMIFCO (Oman India Fertiliser Company) in Oman, where the Indian entities have jointly invested in urea manufacturing with local player.

OMIFCO is 50 per cent owned by the Oman Oil Company SAOC and 25 per cent each by the IFFCO (Indian Farmers Fertiliser Cooperative) and KRIBHCO (Krishak Bharati Cooperative Limited).

The Indian government has a long term off-take arrangement with OMIFCO for sourcing urea, which is produced at lower rates compared to domestic production.

India's annual demand of urea is about 30 million tonnes, while the domestic production is around 22 million tonnes.