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Business News/ Companies / News/  NTPC, Coal India in joint venture to help revive FCIL
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NTPC, Coal India in joint venture to help revive FCIL

NTPC-Coal India venture to set up two urea factories on premises of troubled Fertilizer Corp

The government earlier explored the prospect of roping in private partners to revive sick fertilizer companies such as FCIL but, due to the lukewarm response, turned to financially strong public sector firms.Premium
The government earlier explored the prospect of roping in private partners to revive sick fertilizer companies such as FCIL but, due to the lukewarm response, turned to financially strong public sector firms.

New Delhi: State-owned power producer NTPC Ltd and mining giant Coal India Ltd (CIL) on Monday formed a joint venture that will set up two urea factories on the premises of ailing Fertilizer Corp. of India Ltd (FCIL) to help in its revival, NTPC said.

The joint venture will set up production facilities for urea, the most commonly used fertilizer, at FCIL units at Sindri in Bihar and Gorakhpur in Uttar Pradesh.

“The joint venture company would initially be incorporated with equal equity (50:50) participation from NTPC and CIL. It contains provision of inducting strategic partners at a later date depending upon business requirement of the company," NTPC said in a statement.

An official from NTPC, who declined to be named, said the other details of the venture are to be worked out, including the capacity of the proposed plants and the investment required, for which a consultant will be hired.

Generally, a 1 million tonne urea factory requires an investment of about 6,000 crore, according to an official from the department of fertilizers, who also did not want to be named.

The government earlier explored the prospect of roping in private partners to revive sick fertilizer companies but, due to the lukewarm response, turned to financially strong public sector firms. It proposes to allow public sector investors to set up natural gas-based ammonia or urea plants, which then can help fertilizer firms become financially viable again.

There are, at present, 10 unviable factories belonging to state-run companies FCIL, Hindustan Fertilizer Corp. Ltd, Fertilizers and Chemicals Travancore Ltd, and Brahmaputra Valley Fertilizers Ltd. In addition to the plants at Sindri and Gorakhpur, FCIL’s units at Talcher, Ramagundam and Korba are also in the process of being revived.

The challenges to reviving these units include ensuring pipeline connectivity for shipping natural gas to project sites and ensuring sufficient low-cost, long-term, supply of gas. The Gorakhpur unit falls along GAIL India Ltd’s proposed 2,050km Jagdishpur-Haldia pipeline.

A gas based-fertilizer plant is proposed at Ramagundam through a joint venture of Engineers India Ltd, National Fertilizers Ltd and FCIL, while the Talcher unit is being revived by a combine of CIL, GAIL India, Rashtriya Chemicals and Fertilizers and FCIL, minister of state for chemicals and fertilizers Hansraj Gangaram Ahir informed the Rajya Sabha on 10 May in reply to a question.

Many naphtha-based fertilizer firms slipped into losses due to price controls, delayed subsidy payments and competition from more efficient natural gas-based factories.

Urea is still partially under price control. The government decides in advance how much subsidy it will give for every kg of the fertilizer, and any increase in cost is passed on to farmers.

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Published: 17 May 2016, 01:14 AM IST
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