Kribhco seeks PIB, CCEA nod for Rs 1800 crore expansion

Fertiliser major Krishak Bharati Cooperative Ltd (Kribhco), which has its main urea and ammonia manufacturing plant at Hazira near Surat, has sought clearance from the Public Investment Board (PIB) of Government of India for its proposed expansion plan (known as Hazira Fertiliser Project Phase-II) in the ensuing PIB meeting due on November 8.

Kribhco officials are optimistic about getting the nod from the PIB following which clearance from Cabinet Committee on Economic Affairs (CCEA) would be sought.

Kribhco has also acquired huge piece of land for setting up a 615 mw power plant at Pipavav in Amreli district of Gujarat.

"The expansion plan for our Hazira plant would be discussed in the PIB meet due next Monday and once it is also cleared by the CCEA, Kribhco would be able to add 1,850 metric tonne per day (MTPD) capacity at its existing ammonia production facility while 3,200 MTPD of capacity would be added to its existing urea production facility. The project would cost around Rs 1,800 crore and its commissioning would be achieved in 33 months from the zero date, when we get approvals from CCEA," T R Chaudhary, director (operations), Kribhco told Business Standard on Thursday.

He said that Kribhco will opt for a 2:1 debt and equity ratio for funding the project.

Kribhco may pump in around Rs 700 crore for the expansion, Chaudhary said, "With a healthy balance sheet, banks and financial institutions have already shown interest in funding our expansion project, so funding is not going to be a constraint."

Tenders for the engineering and construction of the project already have been invited. Projects & Development India Ltd (PDIL) has got the mandate for the execution of a major part of the expansion project, while discussions with the bidders are in the final stages. Construction activities are expected to be kicked off during January 2005.

Kribhco produced 17.73 lakh metric tonnes of urea in the last fiscal which is significantly higher than 16.03 lakh mt production posted in the previous fiscal. It also produced 11.17 lakh mt of ammonia during the last fiscal against 9.92 lakh mt in the previous year.

Saying that Kribhco is looking at exploiting potential in other emerging sectors including power generation, Chaudhary said, "We have already acquired land for setting up a 615 mw power plant at Pipavav but because of gas supply constraints in this area, we have not been able to start work for the plant. We have already requested the state government to look into the matter so that required infrastructure for carrying gas to Pipavav can be put in place as the power plant once commissioned will help the Saurashtra region to come out of the reigning power crisis."

The power plant will be developed by Kribhco alongwith Gujarat Power Corporation Ltd (GPCL), an equity partner.

Kribhco is expected to invest around Rs 2,200 crore for the power plant.

Recently, Gujarat State Petronet Ltd (GSPL), a state undertaking, has finalised its plan to lay gas pipelines in Saurashtra region and also at Pipavav, giving boost to Kribhco's plan for power generation.

Saurabh Dalal, minister of state for energy, said, "We have already finalised the plan for laying pipeline through GSPL and budgetary allocations also have been made. We hope to reach gas to Saurashtra region in next two years."