Bids sought for Rs 6,000-cr Uttar Pradesh urea plant
The government has invited bids for the Gorakhpur urea plant in Uttar Pradesh. The project, with an estimated cost of R6,000 crore, would be awarded to a firm or a consortium of companies with a mandate to set up, design, finance, construct, operate and maintain the natural gas-based 1.27 million tonne-per-annum (mtpa) urea manufacturing plant for an initial but extendable period of 33 years.
To attract bidders, the Centre has decided to earmark 2.4 million metric standard cubic metre per day (mmscmd) of domestic natural gas for the project from the Daman field of state-run ONGC, which is expected to start production from September 2016. Considering the production profile of the field, the government is in a position to commit above the referred volume of gas till 2028- 29, said the bid documents.
The natural gas for the urea unit would be delivered through the upcoming Jagdishpur-Phulpur-Haldia pipeline currently being constructed by GAIL (India). Of the total land area of 993.81 acres available with Fertilizer Corporation of India (FCIL) at Gorakhpur, the requisite area of land will be made available to the selected bidder. In addition, FCIL will assist the selected bidder in obtaining clearances required for the project, such as environment clearance and other permissions from the state government.
The auction would be held in two stages. The successful bidders of the first or qualification stage (request for qualification or RFQ) would be unveiled on October 12.
The final winner after the second stage of request for proposals (RFP) would be announced on November 20.
The letter of award (LOA) would be issued within 75 days of this and a final agreement would be signed within 30 days of the award of the LOA. Deloitte Touche Tohmatsu India has been appointed as advisors in the bidding process.
Bids will be invited for the project on the basis of revenue share and upfront amount. The percentage of revenue share and the contract period shall be pre-determined. The upfront amount (or the premium) to be paid by the selected bidder shall be the biddable parameter and shall constitute the sole criteria for evaluation of bids.
According to industry watchers, privately-held companies like the Adani Group and Deepak Fertilisers and Petrochemicals, cooperatives like Kribhco and the government-owned Rashtriya Chemicals and Fertilizers (RCF) may evince interest to bid for the Gorakhpur urea plant.
In July 29, FE reported that the Adani Group is planning a major foray into the fertiliser sector in a move that could help the country cut its expensive imports of urea.
At present, India consumes nearly 30.5 million tonne (MT) of urea every year. Of this, domestic production hovers at 22.5 MT, while the remaining 8 MT are imported.