Indo-Iran Urea Project Set To Take Off

The joint venture was marred by controversy with Kribhco and Iffco differing over the priority to be accorded to the project. The two Indian partners had signed a memorandum of understanding with Qeshm Free Area Authority (QFAA) in March 1994 to set up a joint venture nitrogenous fertiliser complex in Iran.

Based on debt-equity ratio of 3:1, the total equity of the project is $116 million with the Indian partners' contribution being $34 million each. The project envisaged the setting up of 1,500 million tonne ammonia and 2,200 million tonne urea plants. Under the buyback arrangement, the Indian companies had agreed to lift 60 per cent of the urea produced.

 

According to the agreement between the three promoters, the base natural gas price has been fixed at $0.75/MMBTU (million metric British thermal unit). The gas price and cost of other inputs would be frozen for five years from the date of commissioning of the project. Iffco officials, however, said QFAA'S indicative price of $0.10/MMBTU for transportation with an escalation formula from January 1996 linked with the product price (ammonia and urea) and fuel prices is yet to be discussed.

The feed stock price for the Kribhco-Rashtriya Chemicals and Fertilisers (RCF) venture in Oman has already been fixed at $0.50/ MMBTU in addition to the transportation cost of $0.12 to $0.27 for the next 10 years. The $1,127 million joint venture fertiliser project with the Oman Oil Company is expected to go on stream by 1999-2000. Both Kribhco and RCF will pick up the entire urea production of 2,200 tonnes a day. Conservative estimates show the price difference for each tonne of urea is around $85 compared with the prevailing landing cost of about $225.

Kribhco's projects include a Rs 637.87 crore nitro-phosphate project and Rs 979 crore third stream ammonia/urea plant, both at Hazira.

At present, the cooperative has an ammonia-urea complex at Hazira with an annual installed capacity of 14.52 lakh tonnes of urea, whereas Iffco's combined installed capacity of nitrogen is 8.63 lakh tonnes and that of phosphates 3.09 lakh tonnes with plants at Aonla, Kalol, Kandla and Phulpur.