Nagarjuna Fertilisers and Chemicals Limited (NFCL), India's second largest urea player by volume, will spend Rs 4,500 crore on capacity expansion, eyeing an increase in total urea production to 2.9 million tonnes in the next two years.
NFCL has started project work on its third plant at Kakinada in Andhra Pradesh and the new facility will enhance the overall urea production of the fertiliser-maker by 1.3 million tonnes, taking the total production capability to 2.9 million tonnes by December 2015.
"The cost of expansion is about Rs 4,500 crore, which will be financed through an appropriate mix of debt and equity. The Brownfield expansion is an addition to NFCL's existing capacity of about 1.6 million tonnes per annum," a release said.
The proposed increased quantity is already being marketed by the company through imports. 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.
NFCL will be ideally placed to utilize natural gas for the expanded capacity when there is increased production of natural gas from new fields in the KG basin by existing and new operators, officials said. There is a new LNG terminal proposed at Kakinada Port and NFCL would be able to utilize the LNG through this terminal.
The current policy provides for priority allocation of natural gas to the fertilizer sector. Since NFCL is located at the pit head, it would have distinct advantages in terms of availability of gas as well as economy in transport cost, according to the release. NFCL commissioned its first plant in 1991.
The capacity was doubled through commissioning of its second plant in 1997. Both plants were revamped in 2007 resulting in an increase in capacity.
Key project approvals, such as on environment, allocation of water, contracts for natural gas are complete and the company expects to be the first in the country to complete its brown field expansion and start production, it added.