Iffco Kalol plant expansion cost escalates 10% on delay in gas supply

Virendra Pandit Ahmedabad | Updated on March 12, 2018

The Rs 4,660-crore expansion planned by Iffco, the world’s largest fertiliser cooperative, at its urea manufacturing plant at Kalol (Gujarat) has been delayed by almost three years due to non-allocation of additional quantity of natural gas as fuel by the Centre. As a result, its proposed investments have escalated by nearly Rs 500 crore to Rs 5,000 crore now.

“We had urged the Union Ministry of Petroleum and Natural Gas about two-and-a-half years ago to allocate additional gas to Iffco for this plant and are still awaiting a nod,” Mr N.P. Patel, Chairman, Indian Farmers’ Fertilizers Cooperative Ltd (Iffco), said here on Tuesday.

Iffco had also signed an MoU with the State Government for this expansion during the Vibrant Gujarat event in 2009. Even if the Centre allocates gas to Iffco immediately, the expansion would take another two years to complete, an Iffco official said. The Ministry of Environment and Forests (MoEF) had accorded environment clearance to the plant’s expansion and other clearances are also in place.

IFFCO proposes to tie up technology with Italy’s Snamprogetti for the urea plant and Haldor Topsoe for the ammonia plant in this expansion which would increase its capacity from the existing six lakh tonnes to 14 lakh tonnes per annum of urea and from four lakh tonnes to 8.75 lakh tonnes of ammonia annually.

Until now, Reliance Industries Ltd has been supplying 1.2 million standard cubic metres per day (mscmd) of gas, which was proposed to be increased by an additional 2.6 mscmd. “Even now, for our existing needs, we occasionally buy three-times-as-expensive gas from the spot market, through GSPC, as the RIL supply gets erratic at times,” said Mr H.D. Mistry, Senior General Manager.

The Centre had prioritised the fertiliser sector, along with power, for uninterrupted supply of gas from the K-G basin in Andhra Pradesh. The Kalol plant, Iffco’s mother plant, had introduced environment-friendly neem-coated urea, which slows down evaporation of urea’s nitrogen, as a fortified fertiliser and had so far dispatched 1.5 lakh tonnes of this product.

During 2010-11, Iffco produced 85 lakh tonnes of fertilisers and sold 125 lakh tonnes with a sales turnover of Rs 21,195 crore, and a net profit of Rs 1,025 crore. Its plants — Kalol and Kandla (Gujarat), Phulpur and Aonla (UP), and Paradeep (Orissa) — attained the lowest composite energy consumption of 5.814 giga-calories (Gcal) a tonne of urea, Mr Patel said. Iffco’s products reaches 5.5 crore farmers through 40,000 member-cooperatives.

Iffco has also invested in its 19 subsidiaries and paid 20 per cent dividend since the last nine years to its associates, and also a rebate of Rs 5 a tonne on fertilisers, he added.

Published on August 03, 2011

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