The crash in the global prices of urea from the $220-230 level four years back, when the project was conceived, has jeopardised the financial viability of the $1.2 bilion joint venture, whose production cost is projected at $120 per tonne.

The overseas partner, Oman Oil, has been insisting for long that under the present price scenario the project could only become viable if the Government steps in to procure the urea at the agreed price.

"We expect the new government to step in to resolve the knotty issues," said a senior official of Rashtriya Chemicals Fertilizers, which is one of the sponsors of the $1.2 billion project.

Besides Kribhco and RCF, Iffco, the other state-owned fertiliser companies will also join the Indian consortium as co-promoters. The three companies will hold 50 per cent while the balance will be picked up by Oman Oil. The exact proportion in which the three Indian fertiliser companies will hold the shares has yet to be decided. Officials involved with the project said: "The project is presently undergoing review and restructuring in line with the changing business environment." The equity base of the joint venture company is likely to increase from $280 million to $350 million, with the debt-equity ratio at 2:1.

Snamprogetti/Technip has been appointed as the EPC (engineering, procurement and construction) contractor for the project. The partners have also finalised details regarding the urea offtake agreement and gas supply agreement.

The project has been delayed considerably from proposed date of financial closure from December 1998 following the withdrawal of the export credit agency of France, Coface, from the consortium providing export guarantees to the ammonia-urea venture.