RCF to buy Kuwait petro firm pie

The government-owned Rashtriya Chemicals & Fertilizers (RCF), in its first-ever overseas acquisition plan, is eying a significant stake in a Kuwait-based oil and petrochemical major.

RCF, the country's largest public sector player in the fertilizers and chemicals space, is likely to enter the bid to buy around 35 per cent stake in Petrochemicals Industries Company (PIC) - the petrochemical arm of Kuwait Petroleum Corporation, said sources close to the deal. They said the stake acquisition was part of a proposed fertilizer joint venture with PIC, which is planning a fertilizer joint venture company with international players by divesting a significant stake in PIC.

"The chances of RCF winning the bid seem bright now as the Kuwait company is also keen to join hands in another brownfield project planned by RCF in its existing ammonia and urea plant in India," said the sources, adding that the bid procedures were expected be completed in two months.

PIC representatives had recently visited RCF facilities to study the feasibility of co-investing in the proposed brownfield urea project. This Rs 2,200-crore project is currently awaiting the Central government's nod. RCF sources, when contacted, declined to comment on the development.

PIC, which produces ammonia and various nitrogenic fertilizers based on oil and gas, owns four plants for production of liquid ammonia with annual capacity of 6,20,000 metric tonne and three plants for urea production with annual capacity of 1,04,000 metric tonne.

RCF, which has been aggressively perusing its growth opportunities beyond the national boundaries, has an array of major projects in its new strategy. The company is learnt to have similar plans in other oil and gas producing countries.

Since cheap gas is a major boon to the fertilizer industry, it aims to form joint initiatives in such countries to facilitate cheaper imports of ammonia and urea to India, thereby boosting the profitability of the company as well as reducing the subsidy burden of the government.

On the domestic front also RCF had major plans to tap the growth opportunities in the existing segments as well as related areas. The company is also planning to partner with Gas Authority of India (GAILl)to set up a surface coal gasification plant in Talchar in Orissa.

The project, which is estimated to cost Rs 2,500 crore, also includes a fertilizer complex in the state. The joint venture coal gasification plant will be the gas sourcing base for the proposed ammonia plant of RCF in the new fertilizer complex.