Mega PSU fertiliser project at Talcher suffers Rs 2,000 crore cost overrun

Country's first coal gas-based fertliser project, being promoted by four public sector majors, has suffered a cost overrun of over Rs 2,000 crore.

Four public sector entities - GAIL, Coal India, Fertilizer Corp and Rashtriya Chemicals and Fertilizers - would now jointly invest more than Rs 10,000 crore to set up India's maiden fertiliser project based on coal converted into gas in Odisha against Rs 8,000 crore estimated earlier.

The total cost of the fertiliser facility at Talcher as now been pegged at Rs 10,742 crore as per the project cost submitted to the government while GAIL, which holds 29.67% stake in the project, has an internal estimate of Rs 11,611 crore, sources said.

The expected completion time has been estimated to be about 40 months, the joint venture company has told the government.

In 2013, the central government signed a Memorandum of Understanding with Fertilizer Corp for the use of the closed Talcher Fertilizer complex spread over 904 acre for setting up a coal-gas based fertiliser plant, with coal being sourced from Coal India.

The project, however, suffered delay partly because of indecisiveness in selecting the complex technology to convert coal into gas.

That issue was settled last year by settling for a technology developed by Shell Global.

The project also got delayed as it couldn't be decided what kind of coal to use. While the earlier idea was to use high-ash content Talcher coal only, it was later found fit to use a blend of petroleum coke to the extent of 25% of the mix, which will generate ammonia synthesis gas.

Following this, a Memorandum of Understanding with Indian Oil Corp was signed in August 2017 for the supply of pet coke.

The allocation of half of North Arkhapal coal mine at Talcher to the project has also been received along with bridge linkage coal for initial years at a discounted price which has been decided upon.

And with the project finally getting environmental clearance, works is expected to start soon and the construction is likely to get completed in the second quarter of calendar 2021.

The government of India is reviving five closed fertiliser plants of Fertilizer Corp and Hindustan Fertilizer Corp at Talcher, Ramagundam (Telangana), Gorakhpur (Uttar Pradesh), Sindri (Jharkhand) and Barauni (Bihar) by setting up new ammonia-urea plants of 12.7 lakh metric tonne a year capacity each.

MOUNTING COSTS

• Four public sector firms - GAIL, Coal India, Fertilizer Corp and RCF - would now invest over Rs 10,000 crore in the project Odisha against Rs 8,000 crore estimated earlier
   
• The project, however, suffered delay partly because of indecisiveness in selecting the complex technology to convert coal into gas
   
• The project also got delayed as it couldn't be decided what kind of coal to use