Delay In Govt Clearance Pushes Up Nalco Expansion Cost By Rs

The cost of the proposed second phase expansion project of public sector National Aluminium Company (Nalco) has escalated by over Rs 400 crore in the last one year. The expansion proposal still awaits government approval.

The project cost envisaging increase in smelter capacity from 230,000 tonnes to 345,000 tonnes and captive power generation from 720 mw to 960 mw was estimated to cost Rs 2,316 crore last year after it received the necessary clearances before it can be referred to the public investment board (PIB). But due to delay in approval from the PIB and the cabinet committee on economic affairs, the project cost as per a revised estimate has risen to Rs 2,735 crore. The revised estimates have been sent to the Centre recently.

 

The phase-II programme was conceived almost simultaneously with the phase-I expansion plan in 1991-92. The company then was advised to shelve the project due to prevailing depressed prices in the metals market. But with metal prices looking up subsequently, the project was revived in 1995-96.

Nalcos phase-I expansion plan, which is now under implementation, too had suffered a stiff increase in the cost estimates following inordinate delay in the government approval.

The project envisaging to double the bauxite mining capacity to 480,000 tonnes and alumina refining capacity to 157,500 tonnes was initially estimated to cost Rs 960 crore in 1991-92. But, by the time the government gave its final clearance in December, 1996, the project cost had gone up to Rs 1,665 crore.

Following the government nod, the company meanwhile has geared up the project activities and appointed Engine -ers India Ltd as the principal consultants for the expansion plan.

Nalco chairman cum managing director S N Johri said the alumina refinery expansion envisages debottlenecking of the two existing streams of 400,000 tonnes each to take the capacity of each stream to 525,000 tonnes and construction of a new stream of 525,000 tonne capacity.

While the new stream is expected to be completed in 51 months, the expansion of existing streams will take 36 months, Johri said, adding that it would enable the company to produce 105,000 tonnes of alumina in less than three years.

Sources say that the full cost of the first phase of expansion will be met from internal resources. However, if the company is allowed to run both the first and second phase expansion projects simultaneously, then over 60 per cent of the total expenses will be met from internal resources while the rest will be raised from the capital market through suitable routes.

This apart, the company is implementing a number of downstream projects to manufacture value-added items like strip casting, aluminium lithium alloy, auto wheels, special grade alumina, zeolite etc. These projects, now in various stages of implementation, are estimated to cost Rs 250 crore. The company is currently in search of a suitable overseas technology partner for a can stock plant, sources said.

Nalco also plans to firm up supplies of raw material soon by venturing into backward integration projects which include setting up of manufacturing facilities for costic soda, lime, CT pitch, calcinated petroleum coke and aluminium flouride which are used as additives and fixers in the smelter and refinery, Johri said. The detailed feasibility report of these projects are being prepared, he said.