New Delhi: A delay in the announcement of a new fertilizer investment policy has held up the execution of India’s first greenfield fertilizer project since 1995—Matix Fertilisers and Chemicals Ltd’s 3 million tonnes per annum (mtpa) urea manufacturing plant in West Bengal.
The project is being developed since early 2010 at Panagarh in Bardhaman district at an investment of around Rs 5,000 crore and has achieved financial closure, two government officials aware of the development said, asking not to be identified.
Matix, a part of the Yogendra Kanodia and Nishant Kanodia-promoted Datamatics Group, has invested Rs 1,500 crore while it is taking the rest from banks, said a company executive, who also requested anonymity. “The land has been acquired and machinery is in the process of being installed.”
The lenders, however, are unwilling to release the sum until the government finalizes a new investment policy for greenfield and brownfield fertilizer units, which was due to be announced last year, government officials and the company executive said.
The government announced its first fertilizer investment policy in 2008, but failed to attract fresh investments to the sector. Last year, the government said it will rework the policy structure.
The Planning Commission, the government’s apex economic planning body, is still considering the new policy framework. There is no clarity on when it will be finalized, said the government officials cited above.
“Last heard, the Planning Commission had begun working the numbers, but there is no timeline,” one of the government officials said, adding that the Matix project won’t be financially viable if the new policy is not put in place.
An email seeking comments sent to Yogendra Kanodia’s office remained unanswered.
Besides Matix’s greenfield project, the brownfield expansion plans of a number of companies, including Rashtriya Chemicals and Fertilizers Ltd, Indo Gulf Fertilizer Ltd, Indian Farmers Fertiliser Cooperative Ltd, Krishak Bharati Cooperative Ltd and Chambal Fertilisers and Chemicals Ltd, are also awaiting the new policy framework.
“Unless the government frees the price of urea, any investment policy is unlikely to incentivize companies from making new investments,” said Sageraj Bariya, managing partner with Equitorials, a Mumbai-based advisory and research firm.
Matix’s plant will use coal-bed methane, or CBM, as feedstock, sourcing it from Essar Oil Ltd’s Raniganj CBM block.
In July, the Directorate General of Hydrocarbons (DGH) had asked Essar Oil to peg the price of CBM through a market-determined process. The two companies had initially agreed to supplying CBM at $4.20 per million British thermal units (mmBtu), to which DGH had objected.
The second government official said the Matix project will also require natural gas. An empowered group of ministers is looking into the issue of gas allocation to new and existing fertilizer, power and steel units.