NTPC Ltd and Coal India Ltd (CIL) on Monday formed a joint venture that will set up two urea factories on the premises of ailing Fertilizer Corporation of India Ltd (FCIL) to help in its revival.
The JV will build production facilities for urea at FCIL units at Sindri in Bihar and Gorakhpur in Uttar Pradesh.
“The joint venture company would initially be incorporated with equal equity (50:50) participation from NTPC and CIL. It contains provision of inducting strategic partners at a later date depending upon business requirement of the company,” NTPC said in a statement.
The Government had earlier explored the prospect of roping in private partners to revive sick fertilizer companies, but due to a lukewarm response turned to financially strong public sector units (PSU), reports a business daily.
Other details of the JV are to be worked out, including the capacity of the proposed plants and the investment required, for which a consultant will be hired, an official from NTPC has been quoted as saying.
Typically, a 1 million tonne urea factory requires an investment of ~INR 6,000 crore, according to an official from the department of fertilizers.
The Centre proposes to allow public sector investors to build natural gas-based ammonia or urea plants, which then can help fertilizer companies to become financially viable again.
At present, there are 10 unviable factories belonging to state-run companies FCIL, Hindustan Fertilizer Corp. Ltd, Fertilizers & Chemicals Travancore Ltd, and Brahmaputra Valley Fertilizers Ltd.
NTPC, Coal India in joint venture to revive FCIL