Hyderabad-based urea producer Nagarjuna Fertilizers and Chemicals Ltd (NFCL) has embarked on a Rs 4,500-crore expansion plan. It is setting up a third plant at Kakinada in Andhra Pradesh that will enhance the company’s urea production by 1.3 million tonnes, taking the total production capacity to 2.9 million tonnes.
NFCL stated, the cost of expansion will be financed through an “appropriate mix of debt and equity”. Key project approvals, such as environmental clearance, allocation of water and contracts for natural gas have been obtained. It has awarded early work order to Technimont of Italy as a part of the engineering, procurement and construction contract.
The brownfield expansion is an addition to NFCL’s existing capacity of about 1.6 million tonnes per annum. The proposed increased quantity is already being marketed by the company through imports.
According to a company release, it is the first project to be taken up for expansion after the Centre announced its policy on fertiliser. The policy provides floor and ceiling price mechanism with an assured return of 12 per cent to 20 per cent on equity. The policy envisages compensation for variation in the cost of input gas.
Nagarjuna Fertilizers commissioned its first plant in 1991. The capacity was doubled through commissioning of its second plant in 1997.
Both plants were revamped in 2007.
