GAIL, RCF to set up fertiliser plant in Orissa

New Delhi: GAIL India, the country’s largest transporter and marketer of gas, will diversify from its core business to invest in a fertiliser and chemical plant at Talcher in Orissa. The gas utility will form a joint venture with government-owned Rashtriya Chemicals and Fertilisers (RCF) to set up the Rs 2,400 crore plant which will have a capacity to produce 2,940 tonne per year of urea, GAIL, CMD, UD Choubey said.

An agreement between GAIL and RCF will be signed soon, Choubey said.

'The equity structure is yet to be worked out. RCF will carry out a feasibility study on the integrated fertiliser and chemical plant,' Choubey said.

The plant will be fed with 7 million cubic metres a day (mcmd) of gas produced through the surface coal gasification process for which Coal India (CIL) will supply around 5,000 tonne of coal.

'We are in constant touch with CIL. They have in-principle agreed to supply the coal,' Choubey said.

Explaining the rationale behind diversifying into fertilisers, Choubey said that the trigger for the move was that the company wanted to increase its presence in the gas business in east India. 'We have always been supplying gas to fertiliser plants. This is just a move forward,' Choubey explained.

The company will also form another joint venture with Baroda Municipal Corporation for distributing gas to households and vehicles in Baroda in Gujarat.

'Gas has already been allocated for distribution in the city. The investment in this joint venture could be far lesser than as a pipeline network already exists in Baroda,' Choubey said.

Typically the investment in setting up a city gas distribution network is Rs 450-500 crore. GAIL already has joint ventures which supply gas in cities such as Delhi and Mumbai.

GAIL will hold 26% in the Baroda joint venture which the Baroda Municipal Corporation will hold 24%. The remaining 50% is likely to be held by financial institutions.