India is planning to make a major investment in West African nation Ghana to set up a massive urea producing plant with participation from-state-run companies in both the countries. A high-level delegation from India, led by fertiliser secretary S Krishnan, is currently in Ghana to seal the deal.
It can be more cost-effective for India to set up urea plants in countries such as Ghana where gas is abundantly available at reduced cost and import the fertiliser for domestic use, than producing domestically. Cheaper urea lifted from JV plants overseas would help bring down country?s fertiliser subsidy burden, as was demonstrated by the India-Oman venture.
Public sector enterprises such as Rashtriya Chemicals and Fertilisers, GAIL (India) and Coal India are expected to take equity in the project. Ghana?s investment in the plant would be held through one or more of its state-owned enterprises. The project cost is yet to be finalised, but it is expected to be close to $1 billion.
The move to set up a urea plant abroad is to tide over the domestic shortage of natural gas, the feedstock that accounts for four-fifths of the production cost of urea. Ghana would supply natural gas to the plant at reduced cost.
The power and the petroleum ministries are in the process of preparing a new policy for allocating natural gas produced in the country to all new power and fertiliser units, but there is a long queue of more than 200 prospective customers in the power sector alone awaiting gas.
On top of this, the Anil Ambani Group companies have sought gas from RIL?s K-G D6 field, that accounts for about 40% of the country?s natural gas output. The allocation of gas to new customers is believed to be contingent on an increase in gas output.
?We have been exploring the possibility of setting up urea plants in countries with surplus natural gas. Our public sector companies and the partnering foreign government will set up the plants and we will lift the urea for domestic use. We already have such a framework with Oman,? said a person privy to the development.
Indian fertiliser majors Iffco and Kribhco own 25% each in Oman India Fertiliser Company SAOC or Omifco, in which the rest 50% is held by Oman oil company SAOC. This ammonia-urea plant was set up at a cost of $968 million. Import of urea, the fertiliser that can be used on most of the crops, is fairly easy as it is safe to ship and handle and is less corrosive to equipment. The person quoted above said that the finer details of an agreement between India and Ghana would be known only after the negotiations scheduled this week are over.
India has 120 lakh metric tonne capacity for nitrogen fertilisers (urea) but still has to import some urea to meet the domestic demand as production has been declining. A policy framed two years ago to encourage investments in urea production too did not get good industry response in the absence of long term supply of natural gas at stable prices. The world?s third largest fertilizer producer also has to import half of its required phospahatic fertilisers and the entire requirement of potash fertilisers.