Delay in gas allocation holds up IFFCO expansion

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.

Its proposed investments have escalated by nearly Rs 500 crore to Rs 5,000 crore due to non-allocation of additional quantity of natural gas as fuel by the Centre.

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

IFFCO had signed an MoU with the State Government for the 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. This means a delay of nearly three years. The Union Ministry of Forest and Environment (MoEF) has already given environment clearance to the plant's expansion. 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. The expansion will help increase IFFCO's annual ureacapacity from six lakh tonnes to 14 lakh tonnes and that of ammonia from four lakh tonnes to 8.75 lakh tonnes.

Reliance Industries Ltd (RIL) has been supplying 1.2 million standard cubic metres per day (mscmd) of gas till now that was proposed to be increased by 2.6 mscmd.

“Even now, for our existing needs, we occasionally buy gas from the spot market, which is three times expensive, through GSPC, as the RIL supply gets erratic at times,” said Mr H.D. Mistry, Senior General Manager.

Incidentally, the Union Government had prioritised the fertiliser sector, along with power, for uninterrupted supply of gas from the K-G Basin in Andhra Pradesh.

Eco-friendly urea

The Kalol plant, IFFCO's mother plant, had recently introduced environment-friendly neem-coated urea, which slows down evaporation of urea's nitrogen, as a fortified fertiliser. It has 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 sales turnover of Rs 21,195 crore, and 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-calaroes (Gcal) for a tonne of urea, Mr Patel said. IFFCO's products reache 5.5 crore farmers through 40,000 member-cooperatives.

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

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