Completed/Joint ventures Projects

Due to constraints in the availability of gas, which is the preferred feedstock for production of nitrogenous fertilizers, and the near total dependence of the country on imported raw materials for production of Phosphatic fertilizers, the Government has been encouraging Indian companies to establish joint venture production facilities, with buy back arrangement, in other countries, which have rich reserves of natural gas and rock phosphate.

The following are five  such joint ventures already established abroad:-

Oman India Fertilizer Project: A Memorandum of Understanding was signed on 30.7.94 between the Government of India and the Government of Sultanate of Oman, Expressing interest in sponsoring the design, construction, financing and operation of a world scale fertilizer complex in Oman. The Joint Venture Agreement of the project was signed in April 1997. The project wherein the investment of US$ 160 million as equity by IFFCO and KRIBHCO from the Indian side, provides for a buy back arrangement for 16.52 lakh tonnes of urea produced by the project by the Government at a Long Term Fixed Price for a period of 15 years. The major agreements relating to the project were finalized and signed by the parties to the agreements in May-July, 2002. The Urea Off Take Agreement (UOTA) was finalized and signed by the Parties 29-05-2002.  The project has been completed and OMIFCO plant commenced production in May 2005. During 2005-06, a quantity of 13.25 lakh mts. arrived at Indian ports in 47 handy max vessels for handling by IFFCO and KRIBHCO respectively. During 2006-07,a quantity of 7.61 lakh mts. arrived in 27 vessels for handling by IFFCO and KRIBHCO in east and west coast ports of India.  At present, average production of OMIFCO plant is 5500 mts. per day with regular off take of cargo to India from Sur jetty having mechanized loading arrangement.  A brief  tabulated detail of OMIFCO Project is illustrated below:- 

·        MOU signed between Government of India/KRIBHCO/RCF  and Government of Sultanate of OMAN/OMAN Oil Company in 1994 for setting up a gas based fertilizer complex in OMAN.

·        Joint Venture partners/sponsors – KRIBHCO, RCF (later replaced by IFFCO) & OMAN Oil Company signed joint venture agreement for OMIFCO in April 1997.

·        Original proposal envisaging Ammonia-Urea Plants with annual capacity of 14.52 lakh tonnes urea and 3.30 lakh tonnes of merchant ammonia and Indian equity contribution of US$138 million approved by the Government in December 1997.

·        Oman India Fertilizer Company (OMIFCO) registered in OMAN in February 1998.

·        Project parameters wee restructured on account of stiff conditions imposed by bankers following Asian Banking crisis and downturn in international urea market with IFCO replacing RCF as one of the Indian sponsors.

·        Indian sponsors to have three representatives on the Board of Directors of OMIFCO.  (At present IFFCO & KRIBHCO have a nominee each and the 3^rd Nominee of Indian sponsors are from GOI).

 SAILENT PROJECT FEATURES:

GOVERNMENT  OF INDIA’S COMMITMENTS:

• Urea Of-take at predetermined long term prices for a 15 years period of entire urea production (16.52 lakh tonnes per annum) from the plant.
• Urea Off-take Agreement (UOTA) signed by the Government with OMIFCO.
• To provide adequate foreign exchange for import of Ammonia Offtake Agreement.

INDIAN SPONSORS’ COMMITMENTS/RESPONSIBILITES:

• Surplus Ammonia from the project to be purchased by IFFCO during debt service period (10 years) at a fixed price of US$100 per tonne.
• Equity contribution of US$ 80 Million each by IFFCO & KRIBHCO.
• Provide manpower and technical services to OMIFCO as per personnel supply agreement and technical services agreement between OMIFCO and IFFCO/KRIBHCO.
• IFFCO & KRIBHCO to act as importer of OMIFCO urea on behalf of GOI as per UOTA and receive sales fee at US$ 3.5 per tonnes of urea.

OTHER PENDING LANDMARKS.

Mutual Gains:

1.       Oman has benefited by vertical integration of its Gas production, which has led to value addition in the country and consequential more profits and growth of economy.

2.       Oman benefits by increased exports of urea and ammonia.

3.       India benefits with assured supply of urea and Ammonia at predetermined prices, which at present are substantially, lower vis-à-vis international prices.  Till date, the country has made a savings of approximately Rs.478.85  crores {(362212 X 120 X 45) + (740557 X 85 X 45)}in the subsidy bill as the average international FOB prices of Urea has been approximately $235 PMT in the year 2005-06.  In addition, there is a considerable gain in the country’s economy from the assured ammonia supply to IFFCO at $100 PMT.  This assured supply also help the country bridge the gap between indigenous production and demand in the country.  Simultaneously, it has a stabilizing effect on the international prices.

SPIC's Dubai Fertilizer Project: SPIC has set up a gas-based nitrogenous fertilizer plant at Dubai in United Arab Emirates to produce 4.00 lakh MT of urea at an estimated coast of US$ 170 million. The project was commissioned during 2004.  At present, the plant is not functioning since the tie up for gas for running the plant from outside Dubai is being finalized.

Joint Venture in Senegal: The Government of India, Indian Farmers Fertilizer Cooperative Ltd. (IFFCO) and Southern Petro-chemicals industries Corporation Ltd. (SPIC), are equity partners and are collectively holding 25.57% of the share in the joint venture company in Senegal named ‘Industries Chimiques du Senegal’ (ICS). In 1996, compagnie Senegalaise Phosphats de Taiba (CSPT), am mining company which supplied rock phosphate to ICS, has been merged with ICS. The company produces phosphoric acid and finished Phosphatic fertilizers in its plants located in Darou and M’Bao in Senegal. It started production in 1984 and after debottle-necking, attained an installed capacity of 3.5 lakh MT of phosphoric acid per annum. In February 2002, ICS has commissioned a project for doubling production capacity of its phosphoric acid plants and development of rock phosphate mines at a cost of about US$ 250 million. IFFCO has entered into a buy back agreement with ICS with a quantity rebate ranging from 1% to 2 %. During the year 2001, ICS produced 3.59 lakh MT of phosphoric acid in terms of P₂O₅ from ICS with a quantity rebate ranging from 1% to 2%. During the year 2005-06 ICS produced 3.84 lakh MT of phosphoric acid in terms of P₂O₅.

Joint Venture in Jordon: A joint venture project in Jordan to produce 2.24 lakh MT of phosphoric acid per annum jointly implemented by SPIC and Jordan Phosphate Mines Company Limited is under production since May 1997. During the year 2005-06, the company produced 1.95 lakh MT of phosphoric acid.

Joint Venture in Morocco: A Joint venture between Office Cherifien Des Phosphates (OCP), Morocco and Chambal Fertilizers & Chemicals Ltd. (CFCL) to produce 3.30 lakh tonnes of phosphoric acid at a cost of US$ 205 million had been commissioned In Morocco in October 1999. The equity in the venture of US$ 65 million is held by OCP and CFCL equally. The project is under operation since October 1999.