IFFCO inks MoU for Senegal plant revival, to invest $100 m

Indian Farmers Fertilizer Cooperative (IFFCO) on Monday signed a memorandum of understanding with the Senegal government for revival of 6.6 lakh tonne capacity phosphoric acid plant in Senegal.

The Industries Chimiques de Senegal(ICS), is a joint venture company with Government of India holding 6.97%, IFFCO 19.1% and government of Senegal 47% of the equity. Under the MoU, IFFCO will invest $100 million in the next three years for increasing the production to the optimum level of efficiency at approximately 6 lakh tonne. IFFCO will also provide a loan of $10 million to the ICS, repayable on priority.

Under the MoU, IFFCO will handle the existing debt of the company to ensure its repayment to the Senegalese banks and international financial organisations in 15 years and those to the trade creditors in two years.

?The move forms part of the government’s strategy to buyback fertilisers from joint venture abroad on long-term basis,? said a top official in the department of fertilisers (DoF).

?Restructuring of ICS will improve the availability of Phosphoric acid in the country as IFFCO will import bulk of it. It is also expected to have a sobering effect on the international price trend which has been rising for sometime,? he said.

The MoU was signed by the minister of mines and industry, government of Senegal and managing director of IFFCO US Awasthi. The MoU will be soon converted into a legal document.

The ICS, now running at 30% capacity, exports 80% of its produce to IFFCO under an earlier agreement.

It has accumulated losses of nearly Rs 1,300 crore over the last few years. Loss of production of ICS has contributed to reduction in supply of phosphoric acid whose prices are rising steeply.

Earlier, an Indian company led consortium had made an offer to inject $80 million in July this year for recapitalisation of ICS but the move suffered a set back after the Senegalese government signed a deal with Gruope Roullier (RG) of France in November this year.

The agreement with RG threatened the availability of phosphoric acid to India under the long-term offtake contract but would have also led to management control of ICS in the hands of the French company. Secretary, department of fertilisers JS Sarma led the Indian delegation at the detailed negotiations leading to the signing of the MoU.