Kochi: With the state government and GAIL failing to implement the LNG pipeline project connecting Kochi LNG terminal to Bengaluru and, thereby, to the national gas grid, the loss-making Fertilisers and Chemical Travancore Travancore (FACT) will find it increasingly tough to go ahead with its ambitious Rs 5,000-crore ammonia-urea plant.
The Cabinet Committee on Economic Affairs on March 31 had approved “a major policy intervention to supply gas at uniform delivered price to all fertiliser plants on the gas grid for production of urea through a pooling mechanism.”
The policy ensures that urea producers get natural gas, whether imported or domestically produced, at a uniform price. Clearing the major policy intervention, the CCEA said, “It is expected that the cost of production of urea at pooled price would be less than the price of imported urea, which will encourage the existing urea units to produce beyond their reassessed capacity. The increase in urea manufacturing capacity will also contribute to the Make in India initiative.”
FACT had closed down its urea plant in 2003 and even dismantled it after the price of naphtha, the feedstock, went up exponentially.
The company, however, later proposed to set up a plant with a capacity to produce 2200 tonnes of ammonia a day and 2850 tonnes of urea per day which envisaged an investment of Rs 5,000 crore. With the definite shortage of urea in the south, FACT would have found it easy to go ahead with the project.
“Now this option will be tough for us as we cannot compete with the other manufacturers without the cheaper gas which they get,” said a FACT source.
GAIL, the public sector gas marketing company, has embarked on a gas pipeline project connecting the LNG terminal to the national gas grid at Bengaluru.
Should that happen, FACT could also have availed the cheaper gas and go ahead with production of urea. The pipeline project, however, has been stalled as it failed to acquire land for the same.
