PPL to foray into ammonia, urea making with Rs 6,000 cr outlay

KK Birla owned Paradeep Phosphates Ltd, a leading producer of phosphatic fertilisers in the country, plans to set up an ammonia facility and make foray into urea production through the pet coke gasification route at an estimated investment of Rs 6,000 crore.

For the pet coke gasification project, the company is in talks with Indian Oil Corporation (IOCL) for the supply of feedstock from the latter's Paradeep refinery, which is currently producing 3,500 to 4000 tonne of pet coke every month.

"We propose to invest nearly Rs 10,000 crore at our Paradeep plant for setting up of new projects and expansion of existing operations. Out of this, the pet coke gasification to produce ammonia for our in-house use and make a foray into urea will cost about Rs 6,000 crore", said VK Singh, chief executive officer PPL.

The rest amount will be spent on ramping up infrastructure, setting up of ancillary units for production of ammonium nitrate and nitric acid and expansion of fertiliser capacities.

The Paradeep plant of PPL, at present, has a capacity to produce 1.2 million tonnes of Di-ammonium phosphate (DAP) and NPK fertilisers, which is targeted to be increased to 2.5 million tonnes by 2022.

"Now, we require about 3,00,000 tonne of ammonia annually, the bulk of which is imported. The ammonia requirement will double to 6,00,000 tonne after the full expansion of the fertiliser capacity", Singh said.

The proposed pet coke gasification plant at Paradeep will have a capacity to produce 2,500 tonnes of ammonia annually. After meeting the in-house requirement for production of phosphatic fertilisers, the surplus ammonia will be used for making up urea by PPL, he added.

Ammonia constitutes 20 per cent of the input for phosphatic fertilisers while it accounts for 46 per cent of the input in case of urea.

"We are yet to take a decision on the structure and financing of the pet coke gasification project. We are looking for strategic partners for the project for which negotiations are going on", Singh said. He, however, clarified that the company will keep the urea making operation under its control as it had a long experience of manufacturing fertiliser.

PPL was set up in 1992 as a public sector unit by the government of India in collaboration with the Nauru government. Following continuous losses, the government divested its stake in the company in 2002. At present, Zuari Maroc Phosphates Ltd, a 50:50 joint venture of KK Birla group company Zuari Agro Chemicals and Maroc Phosphore S.A., Morocco, holds 80.45 per cent stake in PPL with the residual stake vested with the Indian government.

After the disinvestment, there is a turnaround in the fortunes of the company and it recorded a net profit of Rs 90 crore in FY 17. "This year we expect to end with a better figure based on the physical and financial performance to date", Singh said.