GAIL will offer tech partner equity for Talcher urea plant

Shishir Sinha Richa Mishra New Delhi | Updated on August 19, 2014

Project will use gasified coal; 4 PSUs set to form joint ventures to revive project

GAIL (India) Ltd is willing to offer equity to a foreign technology provider in its proposed joint venture with Rashtriya Chemicals and Fertilisers, Coal India, and Fertiliser Corporation of India, for the revival of the Talcher fertiliser unit in Odisha.

A senior GAIL official said there will be two joint ventures between the public sector entities for the revival of the project, which is estimated to cost ₹8,200 crore and will be the country’s first coal-gasification-based unit. It will have the capacity to produce 1.2 million tonnes of urea and ammonium nitrate annually.

In the first joint venture, essentially for coal gasification, GAIL is expected to hold 70 per cent equity. In the second, for production of urea and ammonium nitrate, Rashtriya Chemicals and Fertilisers and Fertiliser Corporation of India will hold a larger stake.

The joint ventures are likely to be in place by September. The project is expected to be commissioned by 2017.

Need for knowhow

“GAIL has already called for technology licensors to participate, as the technology is not available in India. Coal from India is high on ash content, requiring a special technology for conversion into gas. This technology is mainly available with European companies,” a GAIL official said.

If need be, GAIL and its partners will offer equity to the technology provider. The coal-gasification project is expected to cost ₹2,500 crore.

In September 2013, the public sector entities had come together to revive this project, which is critical as domestic urea production is not enough to meet demand. Besides, the production cost for a gas-based plant is around ₹17,000 a tonne, lower than non-gas based plants.

The project was also discussed in a meeting called by the Prime Minister last week, wherein it was felt that such proposals should be expedited. Urea consumption in the country is around 30 million tonnes, while domestic production is estimated at 22 mt.

With gasified coal as feedstock, there will be no dependence on domestic or imported natural gas. This will lower the cost of urea and consequently, the subsidy bill.

The Government’s subsidy outgo on fertiliser is ₹72,790 crore, of which ₹12,300 crore is for imported, and ₹36,000 crore for domestic urea.

Published on August 19, 2014

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