Nagarjuna Fertilizers to set up 1.3 million tonnes urea plant at Kakinada

MUMBAI: Nagarjuna Fertilizers and Chemicals Limited (NFCL) has decided to move ahead with its 1.3 million tonnes urea plant at Kakinada costing Rs 4,500 crore, which will take its total production capacity to 2.9 million tonne. The company has awarded the EPC contract to Technimont of Italy.

The company's press release mentioned that it would finance the brownfield project with 'appropriate mix of debt and equity', without mentioning the exact proportion. The project is unique as it is ideally located in a region deficit in urea and also at the pit head of the country's largest natural gas reserves, it claimed. The additional capacity will replace company's traded volumes.

"The policy provides floor and ceiling price mechanism with an assured return of 12% to 20% on equity. The policy also provides compensation for variation in the cost of input gas," mentioned the company. It is counting on a sustained increase in domestic gas production over next 2-3 years, which will have fertiliser sector as first priority. It is also open to importing part of its requirement by way of LNG at an import terminal proposed in Andhra Pradesh.