Govt plans Rs 4,400-cr urea plant in Assam

Written by Press Trust of India | Updated: Aug 8 2014, 08:21am hrs
Public sector fertiliser firm BVFCL plans to set up a urea-ammonia plant with capacity of 8.64 lakh tonnes per annum in Assam in partnership with Oil India (OIL) and the state government, entailing an investment of R4,400 crore.

According to sources, Brahmaputra Valley Fertilizer Corporation Limited (BVFCL) and the Assam government will have 11% equity each in the joint venture, while Oil India (OIL) will have a 26% stake. BVFCL's is likely to contribute its share of equity by way of transferring the useful and equivalent tangible assets to the proposed joint venture, they added.

All the three parties will be awarded equity in the project on nomination basis and the project will come up at the existing BVFCL premises in Namrup, sources added.

The remaining 52% stake in the project will be awarded through bidding process to either public or private parties, they added.

The total estimated cost of the project is around R4,400 crore, sources said.

The proposal has received an in-principle approval of the Planning Commission and the Board for Reconstruction of Public Sector Enterprises (BRPSE) has also recommended setting up of a new plant at Namrup.

Based on the recommendation of the BRPSE, a note for the Cabinet Committee on Economic Affairs (CCEA) is under consideration, sources said.

The production cost of urea at existing BVFCL's two urea plants Namrup-II and Namrup-III is much below international price of urea as these plants are situated in the North-East, get concession in gas price to the tune of 40%.

Sources added that both these plants Namrup-II and Namrup-III have already run for 38 years and 27 years, respectively, and their operations are economically viable in short-run only so there is need for new plant which can utilise the existing cheaper gas.

At present India's urea production is stagnant at 22 million tonnes while its annual demand is about 30 million tonnes, and in last decade there has not been any new urea capacity has came up in the country.