GAIL, RCF plan fertiliser plant in Orissa

GAIL India Limited, the country's largest gas distributor, is diversifying from its core business to invest in a fertiliser and chemical plant at Talcher in Orissa.

GAIL will set up a joint venture with government-owned Rashtriya Chemicals and Fertilisers (RCF) to set up a Rs 2,400 crore plant with a capacity to produce 2,940 tonnes of urea annually, GAIL Chairman and Managing Director U D Choubey said.

An agreement between GAIL and RCF will be signed soon.

"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 gassification process, for which Coal India Ltd (CIL) will supply around 5,000 tonnes of coal.

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

Choubey said that with this move GAIL would 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," he explained.

The company will also set up another joint venture with Baroda Municipal Corporation to distribute gas to households and vehicles in Baroda.

"Gas has already been allocated for distribution in the city. The investment in this joint venture would be reduced as there already exists a pipeline network in Baroda," Choubey said.

GAIL will hold 26 per cent in the Baroda venture, the Baroda Municipal Corporation will have 24 per cent and the remainder 50 per cent is likely to be held by financial institutions. Typically the investment for setting up a city gas distribution network is Rs 450-500 crore. GAIL already has joint ventures to supply gas in Delhi and Mumbai.