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CIL reluctant to be part of coal gasification JV for FCIL's Talcher plant revival

The ambitious Rs 8,000 crore plan of reviving Fertiliser Corporation of India Ltd's (FCIL) defunct urea plant at Talcher in Odisha seems to have run into a roadblock as Coal India Ltd (CIL), one of the three State-run companies involved in its revival plan along with GAIL and Rashtriya Chemicals Fertilisers, is learnt to have shown its reluctance to be a part of its coal gasification process.

The revival of FCIL's urea plant consists of two parts, one is the setting up of an upstream coal gasification unit through a joint venture (JV) route where GAIL has a majority 80 per cent stake, while the remaining 10 per cent is with CIL and the residual 10 per cent to be given to the entity who will provide the coal gasification technology. The other part involves setting up of a urea-cum-ammonia nitrate complex where Rashtriya Chemicals Fertilisers (RCF) and CIL would have 42 per cent stake each in the JV, while GAIL would have 5 per cent stake and the residual stake would be owned by FCIL.

Though in February this year, CIL's board gave an in-principle approval to form the JV for reviving FCIL's Talcher plant, sources close to the development said that the Maharatna company is not keen to be part of the JV for setting up of the upstream coal gasification unit, saying that it does not seem feasible to it.

CIL has to look for the entity which would provide the coal gasification technology for the said unit and sources pointed out that the State-owned coal producer feels that its role in the JV is limited to only facilitating the technology partner and in return it is not benefiting financially from it.

Though none of the CIL's officials responded to queries and Coal Ministry officials expressed ignorance on the matter, sources in the know confirmed CIL's reluctance. While CIL has not taken any formal step to walk out from the JV with GAIL to set up the upstream coal gasification unit, the move could prove to be a setback in Talcher's revival plans.

If CIL withdraws from the JV to set up the upstream coal gasification unit in FCIL's Talcher urea plant, though it has a minority stake in it, then mainly it could prove to be a major dampener for Fertiliser Minister Srikant Jena, who had pushed through the revival plan with an eye on boosting Congress' chances in Odisha during the ongoing Lok Sabha polls.

The consortium of RCF, GAIL, CIL and FCIL are to invest Rs 8,000 crore for the revival of urea plant at Talcher with a production capacity of 1.2 million tonnes per annum.

FCIL had signed a MoU with RCF, GAIL and CIL in September 2013 for revival of this plant, which was closed in 2002.

The MoU was signed to form two separate JVs to revive this plant and to also build a power plant and a coal washery facility at the site. The project is expected to be commissioned by 2017.

The Board for Industrial and Financial Reconstruction (BIFR) had de-registered FCIL on June 27, 2013, thus paving the way for the revival of its closed urea plants. This happened after the Government had approved the proposal to revive five closed units of FCIL at Sindri, Talcher, Ramagundam, Gorakhpur and Korba.

The Government had also approved the waiver of loan and interest amounting to Rs 10,644 crore to FCIL, last year.

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