Fertiliser ministry keen on PSU joint venture for acquisitions abroad

In order to create long-term resource security for the country in fertilizer sector, the Centre is pushing for the creation of India Overseas Investment Corporation, a joint venture company which would raise funds for public sector undertakings for acquisitions abroad.

The venture would be formalised in such a way that the paid up capital of IOICL would be fixed at Rs 10 crore, and companies in energy sector would hunt for resources under its ambit. The department of fertilizers had earlier mooted the creation of a sovereign wealth fund with an initial corpus of Rs 5,000 crore for acquisitions abroad.

According to the department of fertilizers, funds for acquisitions would be raised through long-term rupee bonds, which will be subscribed by PSUs from their surplus funds and financial institution. The matter would come before the Cabinet Committee of Economic Affairs after being formalised.

A Parliamentary standing committee on chemicals and fertilizers too batted for speeding up the procedural hurdles in creation of the venture.

“The committee expect the department to pursue the matter vigorously…. To expedite the establishment of IOICL,” the panel added. The idea for a common joint venture for overseas acquisitions was mooted by the department of economic affairs first, while the ministry of fertilizers was batting for the creation of a sovereign wealth fund for acquiring fertilizer assets abroad.

Though companies like ONGC and Oil India Ltd (OIL) had plans to set up common overseas acquisition arms, this would be for the first time, the state would be setting up a similar venture. According to sources, the joint venutre’s mandate would be to provide equity and debt to public sector undertakings.

“Already Indian companies are forming joint venture with middle east companies, but this would be a government orchestrated effort. In fertilizer sector, this is important as we badly need resources like potassium, rock phosphate and urea from abroad,” said a Mumbai-based research analyst. According to the report, till now, the government has not given any timeframe in setting up of the company.

The major countries from where the fertilizers have been imported during the last three years include Australia, Bahrain, Belarus, China, Canada, Chile, CIS, Egypt, Estonia, Germany, Greece, Indonesia, Iran, Israel, Jordan, Korea and Kuwait.