Had Matix Fertilisers and Chemicals’ plant near Panagarh in West Bengal started producing urea, it would have had a claim to fame: the only one in the world to use coal-bed-methane (CBM) as feedstock.

But eastern India’s only urea manufacturing facility has been idling for nearly two years now, for want of gas. Also idling is the investment of approximately ₹4,700 crore.

Promoted by the Kanodias of the Datamatics group through a Mauritius-based holding company, the 1.3 million tonne per annum project was to run on 2.8 million metric standard cubic metre (mmscmd) of methane to be supplied by Essar Oil from its Ranigunj field beginning 2012. But two years later, Essar is producing a mere 0.3 mmscmd of gas or a little over 10 per cent of the promised volume.

According to Essar sources, the gas supply problem was because of delays in “land (acquisition), environment (clearances), geological and other factors”.

The non-availability of gas has forced it to reschedule the plant’s commissioning several times since 2013. “Had there been a way out, we would have exercised the option,” a Matix source told BusinessLine .

There is little Matix can do about the situation. For, the eastern region is not on the country’s natural gas or LNG distribution map. And the total availability of methane (from Essar, Great Eastern Energy and ONGC) is a mere 0.55 mmscmd.

Production in June? But with fresh promises from Essar, Matix is now hoping to bring a part of the capacity on stream, in June 2015.

In its 2013-14 balance-sheet, Matix reported: “Essar (has) projected they shall be able to supply the minimum required gas in Q1 2015 at 60 per cent and ramp up the same to 100 per cent required levels … by Q1 2016.”

A senior Essar official reiterated to BusinessLine that “We are confident of supplying 1.2 mmscmd of gas to Matix by June.”

According to him, the company’s current production is based on 100 wells out of the 240 drilled so far. While the output from the operating wells can be ramped up to 0.45 mmscmd, Essar expects the remaining 140 wells to add 0.75 mmscmd capacity in the next six months.

More funding The delay in bringing the fertiliser unit on stream is set to escalate the project cost from the initial ₹5,000 crore.

In a regulatory filing earlier this year, Matix said it has approached the lenders for a “revision in project cost” and additional finances.

A consortium of 15 banks, led by IDBI, financed two-thirds of the project cost through a mix of ECBs and foreign currency term loans.

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