Lack of good quality coal slows down FCIL's Talcher plant revival

Delay in availability of good quality coal has somewhat slowed down the Rs 8,000 crore revival plan of Fertiliser Corporation of India Ltd’s (FCIL) Talcher urea plant in Odisha, as the process of setting up an upstream coal gasification and purification facility which is a part of the plant’s revamp, requires coal with lesser ash content for efficient functioning.

Two joint ventures (JVs) were to be inked under the Talcher revival plan.

In the first JV, an upstream coal gasification unit was to be set up with GAIL having major stake in it. The second JV was for a downstream urea-cum-ammonia nitrate complex where Rashtriya Chemical and Fertilisers (RCF) and Coal India Ltd (CIL) will have majority share.

In the upstream JV, around 80 per cent stake is to be held by GAIL and about 10 per cent stake will be with the technology provider of coal gasification.

The rest would be with FCIL. However it is the signing of this JV which has got delayed as coal with lesser ash content is required for firing up the coal gasification unit.

Sources privy to the development said that despite several round of talks having taken place between GAIL and CIL, there has been no sense of finality regarding as to when coal with lesser ash content (or washed coal as it is called in common parlance) will be made available for the gasification unit.

CIL being the major producer of coal in the country, has to provide the dry fuel for the gasification unit.

However, the coal which is produced in India has high ash content (of about 45 per cent), whereas sources pointed out that for this particular unit, coal having ash content in the range of 30 per cent to 35 per cent is required.

Official sources said that though talks between GAIL and CIL for ensuring supply of lower ash content coal have not reached any concrete solution over the last few months, GAIL is hopeful that the latter will be able to fulfill the requirement soon.

Sources further pointed out that due to the Lok Sabha polls, the process got stalled, and now that a new Government has assumed power at the Centre, things are expected to move smoothly.

In layman's terms, ash content of coal is the non-combustible residue left after coal is burnt. It represents the bulk mineral matter after carbon, oxygen, sulfur and water (including from clay) has been driven off during combustion.

Simply put, with the coal thoroughly burnt and the ash material expressed as a percentage of the original weight, it gives an indication about the quality of coal.

Once low ash content coal is provided by CIL, only then will GAIL be able to ink the JV with the technology partner (who will further wash the coal down to make it suitable for the gasification unit).

As per the arrangement, RCF and CIL are to have around 42 per cent stake each in the second JV, under which the downstream urea-cum-ammonia complex is to come up at Talcher. GAIL will have 5 per cent stake in it while the residual stake would be with FCIL.

On September 5, 2013, FCIL had signed a memorandum of understanding (MoU) with RCF, GAIL and CIL for the revival of its urea plant in Talcher, which has been closed since 2002.

According to the MoU, the Talcher urea is to be revived within a period of three years. The Union Cabinet had approved the revival plan in April 2007. The project once it is complete, is expected to produce 1.2 million tonnes per annum of urea and ammonium nitrate.

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