Revival of Talcher fertiliser unit may be delayed further as Coal India raises doubts on technology

In what may further delay the revival of Rs.9,000 crore Talcher fertiliser unit, state-run Coal India Ltd (CIL) has raised apprehensions over the shortlisted coal-gasification technology partner for the project.

 

According to a senior government official, state-run Projects & Development India Ltd (PDIL) in its recommendations has suggested names of three global technology partners, including US-based Synthesis Energy Systems (SES), Germany-based Uhde Fertilizer Technology and Anglo-Dutch major Shell.

 

PDIL in September had invited bids for selecting a technology partner for the Talcher fertiliser unit, which will produce 1.3 million tonne (MT) of urea and few other fertilisers.

 

“PDIL has submitted its recommendations regarding the probable coal gasification technology partner to the joint venture (JV) company, which includes GAIL (India) Ltd, CIL, Rashtriya Chemicals and Fertilizers Ltd (RCF) and Fertilizer Corp. of India Ltd. as partners. In a recent board meeting of the JV company, RCF and GAIL have agreed to finalise the coal gasification partner. However, it is Coal India which has raised apprehensions about the technology,” said the official quoted above.

 

The plan had earlier also hit the skids with project consultant SBI Capital Markets Ltd, hired by Coal India, had raised doubts over feasibility, as reported by InfraCircle on 12 April.

 

Another government official, who did not wish to be named, said fertiliser secretary Vijay Shankar Pandey, in a review meeting held on 23 December, directed the Talcher JV company to finalise the coal gasification technology partner as soon as possible.

 

“There has been already a lot of delay in the project because finalisation of technology partner is taking too much time. Also, a coal block has been allotted to the JV company near Talcher. But still things are not moving at that pace,” said the second official quoted above.

 

Queries emailed to ministry of chemicals and fertilisers, Coal India, SES, Uhde and Shell remained unanswered.

 

Experts say the project will languish if a partner is not interested. “The moment you find a major partner not enthusiastic, the project will go on lingering. Talcher urea project has been hanging on one pretext or the other for quite long,” said U S Jha, former chairman and managing director, RCF.

 

In December 2014, a consortium of four state-run companies, including GAIL, CIL, RCF and Fertilizer Corp. of India Ltd signed an agreement to set up a coal gasification-cum-fertiliser plant at Talcher.

 

The Talcher unit will be a combination of two key processes — a unit for converting coal into synthetic gas, or syngas, and another unit that will use the gas as fuel to manufacture urea and other fertilisers. Also, urea production fuelled by the coal gasification technology costs Rs.2,000-3,000 less per tonne which will be beneficial for farmers.

 

India’s annual urea demand is around 31MT. The country witnessed a record production of 24.5MT of urea for the financial year ended 31 March 2016. Due to an increase in the domestic production, urea import in the country during the last financial year also came down by around 3.4% to 8.47MT, compared with 8.75MT in 2014-15.