In its concluding remarks, the board said in a free market scenario, none of the four projects could be considered to be either "financially or economically viable" and wondered if the costs of the projects could be brought down to increase return on investments, the sources added.

CCEA had cleared setting up of four projects by IFFCO at Nellore, Rastriya Chemicals and Fertilisers (RCF) at Thal and Kribhco at Gorakhpur and Hazira with a combined annual capacity of 30.72 lakh tonnes of urea in its bid to cut down country's import dependence on this vital agro input.

However, PIB said "if the level of imports were to be assumed at 15 lakh tonnes of urea per year, as has been noted by the CCEA, the demand-supply gap can accommodate only two plants of 7.5 lakh tonnes capacity each till 2003-04."

When contacted, fertiliser ministry officials admitted that a note was being prepared for the consideration of the Cabinet in the light of the outcome of PIB meeting.

PIB said the viability of each project would depend on the availability and the unit cost of various feedstocks, the extent of utilisation of the capacity, the location of the plant vis-s-vis the area of consumption of fertilisers and the price at which imported fertilisers were available at a given location.

On the feasibility of IFFCO's Nellore project, the board said the capital costs in this case were much higher than those in the case of the other three projects and hence not recommended as it was "unviable".

The Nellore project could be considered at the appropriate time as and when Liquified Natural Gas (LNG) was available as feedstock at a reasonable price, provided the project could be implemented at a lower cost.

Referring to Kribhco's Gorakhpur project, the board said implementation of the proposal would critically depend on a decision to hive off the existing unit of the Fertiliser Corporation of India (FCI) because only then the permission of Board for Industrial and Financial Reconstruction (BIFR) could be obtained for using existing location and facilities for the new unit.

The board noted that the availability of fertilisers from the proposed Oman India Fertiliser project has been taken into account by the fertiliser ministry as a part of import of 15 lakh tonnes of urea.

"As of now, India may have to enter into a firm commitment with the joint venture company to purchase a certain minimum quantity of fertiliser at a pre-determined price," the board said. Such an arrangement would leave almost no room for any flexibility on imports, it added.

The board also concluded that a uniform technology and mode of implementation might not be prescribed for all the projects and this decision should be taken by the respective boards taking into account the technical and economic considerations.

PIB also asked the fertiliser ministry to detail a mechanism to ensure that any fertiliser company that is desirous of seeking subsidy from government should obtain prior approval of the government regarding the location and project cost of a fertiliser project.