Tata Chemicals along with its joint venture partners Singapore-based Olam International and the Government of Gabon have signed the pre-construction services agreement with Technip S.A. for the gas-based urea fertiliser plant in Gabon, Africa.

Gabon Fertiliser Company (GFC), the joint venture company, is setting up a 1.3 million tonnes a year ammonia/urea fertiliser plant, which is expected to be one of the lowest cost producers of urea globally. The selection of Technip marks the first definitive step taken by GFC in the construction the plant.

Technip, which was selected after a competitive bidding and evaluation process, is a world leader in project management, engineering and construction in the energy and chemical industry.

Technip targets to complete both the front-end engineering and design and project cost within seven months and thereafter achieve the commercial production of urea within 31 months, Tata Chemicals said in a press release.

Tata Chemicals in April acquired 25.10 per cent stake for Rs 1,300 crore in the stream-I of the port-based Greenfield project with Olam owning 62.90 per cent and Republic of Gabon holding the rest.

The project will use natural gas as feedstock to be supplied at competitive price by the Gabon Government. GFC has chosen the convertible lump sum turnkey methodology to ensure that the project is implemented within the best time and cost norms of the industry, Tata Chemicals said in a press release on Monday.

Cost-effective project

The company would decide the front-end engineering and design and project cost through an ‘open book estimation' methodology. After deciding on these fronts, the project will be converted into a lump sum turnkey contract, said the company.

Apart from giving considerable flexibility in the optimal design of the plant, this methodology is expected to result in significant savings in both the capital expenditure cost and project schedule. This is ideally suited for projects in remote locations where the costs and time schedule are difficult to estimate accurately, the release said.

Tata Chemicals shares on BSE were down 1.25 per cent at Rs 328 on Monday.

Taking off

Tata Chemicals to provide project management consultancy, and operations and maintenance service after the project is commissioned

The project reserves up to 25 per cent of the output for sale in Indian markets through Tata Chemicals network, subject to de-canalisation in India.

As the main contractor, Technip will provide licensed technologies for the plant.

(This article was published on September 12, 2011)
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