Revival Of Fertilizer Plants



Revival Of Fertilizer Plants


The Government has laid a roadmap for achieving self-sufficiency in the production of the fertilizers by reviving defunct fertilizer units in various parts of the country and establishing new units along the route of the Natural Gas Grid. Stating this in a written reply in the Lok Sabha today, the Minister for Chemicals and Fertiliser gave the following details relating to revival of the sick fertilizer units:-

Status of the revival of closed & sick fertilizer PSUs:
Out of the nine public sector fertilizer companies under the administrative control of the Department of Fertilizers, four are sick.  These are Fertilizer Corporation of India Limited (FCIL), Hindustan Fertilizer Corporation Limited (HFCL), Madras Fertilizers Limited (MFL), Fertilizers And Chemicals Travancore Ltd. (FACT) and Brahmaputra Valley Fertilizers Corporation Ltd. (BVFCL).  Out of these, the units of FCIL and HFCL are presently lying closed since 2002.  MFL, FACT and BVFCL are operational but sick companies.Details of revival/restructuring of these units are discussed below:
Revival of closed units of HFCL/FCIL
In 2008, Cabinet approved revival of FCIL and HFCL units subject to non-recourse to Government funding and to consider write off of GOI Loan & interest to the extent required. The revival of these closed units would be through nomination route by PSUs and through bidding route by private sector. Sindri, Talcher and Ramagundam Units of FCIL to be revived on nomination basis. Gorakhpur & Korba units of FCIL and Durgapur, Haldia,  Barauni of HFCL to be revived through bidding route.
In August, 2011, the Cabinet Committee on Economic Affairs (CCEA) had approved the Draft Rehabilitation Scheme (DRS) for revival of all the Units of FCIL and HFCL. DRS envisaged revival of Talcher Unit by the consortium of M/s.Rashtriya Chemical & Fertilizers Limited (RCF), M/s Coal India Limited (CIL) and M/s Gas Authority of India Limited (GAIL), revival of Ramagundam Unit by M/s. Engineers India Limited (EIL)  and  M/s. National Fertilizers (NFL) Limited and revival of Sindri unit by M/s Steel Authority of India Limited (SAIL).
In its meeting held on  9.5.2013, CCEA, inter-alia, approved waiver of Government of India loan and interest to facilitate FCIL to arrive at positive net worth. This enabled FCIL to get de-registered from the purview of Board for Industrial and Financial reconstruction (BIFR). Proposal/action plan on revival of HFCL units to be taken up once revival of FCIL units is on track.  The progress of revival of FCIL units is as under:
Revival of Talcher:
Talcher unit of FCIL to be revived by consortium of PSUs namely RCF,GAIL,CIL and FCIL by forming two joint venture companies, namely JV 1 & JV 2 with the following time line:
     i.         JV formation through RoC                                 : By 30.11.2014
     ii.        Financial closure & Zero date                            : By 1.01.2015
     iii.       Commissioning of Project                                  : By 31.12.2018
 Revival of Ramagundam
Ramagundam unit of FCIL to be revived by consortium of PSUs namely NFL, EIL and FCIL by forming a JV company with the following time line:
     i.                JV formation                                                   : By 31.12.2014
     ii.               Award of contract to Technology Licensors    : By 31.03.2015
     iii.              Project completion                                          : By 30.9.2018
Revival of Sindri:
For Sindri unit, SAIL-Sindri Projects Ltd. (SSPL), a wholly owned subsidiary of SAIL, has been incorporated in November 2011 for the purpose of revival of Sindri Unit of FCIL. Out of total land of 6652 acres with FCIL at Sindri, only 498 acres (the area of existing fertilizer plant) is encroachment free contiguous land as against the requirement of 3247 acres of encroachment free contiguous land required by SAIL for setting up the proposed facilities. However, no much progress has been made due to non-availability of around 3000 Acres of contiguous piece of land for the Steel Plant.
In the context of the recent announcement of the proposed Jagdishpur-Haldia Pipeline of GAIL, DoF is exploring the feasibility of fast tracking the revival, of Gorakhpur unit of FCIL.  Revival of Korba unit is pending.
Financial Restructuring of BVFCL
          BVFCL is incurring financial losses since inception due to low capacity utilization & high energy consumption. The plants were underperforming due to obsolete technology, equipment failures and shortage of natural gas. To address the issue of sickness of BVFCL, based on the recommendations of Board for Reconstruction of Public Sector Enterprises (BRPSE), a comprehensive proposal seeking financial restructuring of BVFCL has been proposed to be placed before CCEA.   At present, the draft CCEA note is under Inter-ministerial consultation.
Financial Restructuring of MFL:
MFL is a Joint Venture between GOI M/s Naftiran Intertrade Co Ltd (NICO) with present share holding of GOI & NIOC at 69.78% and 30.22 respectively. MFL started incurring losses in the year 2003-04 and declared Sick in 2009. A comprehensive proposal seeking financial restructuring of MFL to address the issue of sickness was submitted to the Department of Public Enterprises (DPE) to place it for the consideration/approval of BRPSE.    However DPE returned the proposal in July, 2014 stating that the post of Chairman, BRPSE and several other members are vacant.
Financial Restructuring of FACT:     
FACT located at Udyogmandal, Kerala and engaged in manufacture and marketing of fertilizers and petrochemicals, design, engineering & consultancy and in fabrication & erection of industrial equipment.
 FACT has started incurring losses since 1998-99 and is a sick unit. Based on the recommendations of BRPSE, a comprehensive proposal seeking financial restructuring of FACT to address the issue of sickness was submitted to the Cabinet Secretariat to place it for the consideration/approval of CCEA.  Department of Expenditure has raised some issues on the matter.  Department of Fertilizers is in discussions with Department of Expenditure to resolve these issues. The financial revival package submitted by FACT is yet to be placed before CCEA.
Revival Of Fertilizer Plants Revival Of Fertilizer Plants Reviewed by Ajit Kumar on 10:38 PM Rating: 5

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