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To boost urea production and reduce import dependence, the Cabinet has decided to pump in ₹10,500 crore in two plants.
The Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi, on Thursday approved an investment of ₹6,000 crore towards the revival of the closed Sindri unit of the Fertiliser Corporation of India Ltd (FCIL). The unit and its other facilities have not been operating since 2002 and the move makes it the fifth facility of a public sector manufacturer to receive an approval for revival.
It also approved the setting up of a new ammonia-urea complex of 8.64 lakh tonnes (lt) capacity at Namrup in Assam through public-private partnership (PPP) or by a joint venture involving the Brahmaputra Valley Fertilizer Corporation Ltd (BVFCL), Oil India Ltd and the Assam government. The estimated investment is ₹4,500 crore.
Both the moves are aimed at reducing urea imports, which are estimated at 80 lt, with domestic production pegged at 230 lt and demand at around 310 lt.
FCIL unit“The setting up of a new unit at Sindri will meet the growing demand of urea in the States of Bihar, West Bengal and Jharkhand. It will also ease the pressure on railway and road infrastructure … thereby saving government subsidy on freight,” an official statement said. The government expects the unit to create 500 direct and 3,000 indirect jobs.
The statement also mentioned that there were no functional urea units in Eastern India barring two small facilities in Namrup. Earlier, the Centre had approved revival of the Talcher and Ramagundam units of FCIL through a ‘nomination route’, its Gorakhpur unit through a ‘bidding route’, and the Barauni unit of Hindustan Fertiliser Corporation (HFCL). These four units are likely to produce 52 lt of urea annually.
“Now the Sindri unit is approved for revival through bidding route. Earlier its revival was to be done through PSUs (SAIL & NFL),” the statement added.
BVFCL revampThe ammonia-urea complex venture with BVFCL, OIL and Assam government having an 11 per cent, 11 per cent and 26 per cent equity holding, respectively, and the balance 52 per cent by private or public sector entities, would be inducted through competitive bidding.
It would help spur urea exports and save ₹600 crore annually due to reduction in production costs and import substitution.
“The entire production of urea from this unit shall be neem-coated so that its benefits are available to the farmers of the North-Eastern region also,” it added.
The Cabinet also approved financial restructuring of BVFCL by waiving entire cumulative interest accrued of Central loans that stood at ₹774.61 crore as of March 31. It further approved conversion of ₹594.71 crore in government loans to interest-free loan.
“This will enable BVFCL to participate as equity partner in this project and will sustain the operation of the existing plants during the interim period till the new plant comes into operation,” it added.
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