National Fertilizers Limited (NFL), Engineers India Limited (EIL) and Fertilizer Corporation of India Limited (FCIL) have signed a joint venture agreement on January 14 to set up ammonia and urea plants, with a total outlay of Rs 5,000 crore.

The agreement envisages forming a Joint Venture Company for setting up new ammonia and urea plants of 2200 MT per day and 3850 MT per day capacity respectively at the existing site of Ramagundam Fertilizer Plant in Karimnagar district in Telangana, according to a BSE filing.

The new company will be registered as Ramagundam Fertilizers and Chemicals Limited. The Rs 5000-crore project is expected to be funded in debt:equity of 70:30 per cent. While NFL and EIL are contributing equity of 26 per cent each, EIL will provide 11 per cent equity. The balance equity is in the process of being tied up.

The venture was signed in the presence of Ananth Kumar, Minister for Chemicals and Fertilizers and Dharmendra Pradhan, Minister of State for Petroleum and Natural gas.

The revived plant will help in increasing the indigenous urea production in the country. The plant with a capacity of 1.27 million tonnes per annum of urea will be based on natural gas as feedstock and is targeted to be completed by 2018. The natural gas supply for the plant is likely from proposed Mallavram-Bilwara pipeline and water from Sripada Yellampally barrage built over Godavari river.

As per the arrangement, NFL shall provide marketing services to the venture and EIL, engineering, procurement and construction management consultancy services for the project.

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