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Iffco terms for Petronet stake

Calcutta, Nov. 22: Indian Farmers Fertiliser Co-operative Ltd (Iffco) and Qatar-based Rasgas plan to take a 10 per cent stake each in Petronet LNG (PLL), which is setting up a five-million tonne liquefied natural gas terminal at Dahej in Gujarat. Sources said both companies have shown keen interest in the project which is being set up to import LNG.

Rasgas will commence its due diligence process shortly while Iffco is still in talks with Petronet LNG, which is a consortium of public sector oil and gas companies. Petronet LNG has already signed an agreement with Rasgas to source five million tonnes of LNG at Dahej and 2.5 million tonnes at Kochi over a period of 25 years.

Iffco—one of the largest producers of fertilisers—has, however, put a rider on its proposed investment. Sources said Iffco has demanded at least 0.5 million tonnes of LNG for its 10 per cent stake in the venture.

“If the other shareholders can be given gas offtake agreements, why can’t we demand the same in lieu of our equity'” a senior Iffco official said.

LNG, being an important feedstock for the fertiliser industry, is expected have a huge demand once the terminal is in place.

Under the agreement, Gas Authority of India Ltd (Gail), Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL), which hold 12.5 per cent stake each in Petronet, will have the main offtake rights from the proposed terminal.

Gail will market 60 per cent of the 20 million cubic metres of gas per day while IOC has a right to market 30 per cent. The remaining 10 per cent LNG would be marketed by BPCL.

An equity stake in the company coupled with offtake rights will enable Iffco to reduce its production cost substantially in the next few years. Iffco’s annual capacity of urea is now 1.62 million tonnes while the capacity of NPK/DAP stands at 3.09 lakh tonnes. The co-operative has three major fertiliser units, one each at Kalol, Phulpur and Aonla. If Petronet LNG finally approves Iffco’s demand, the co-operative may also go for massive expansion in a couple of its units, sources said.

The Rs 2,500-crore Dahej project is likely to be commissioned by 2003-04. The terminal will cater to the primary hinterland of south and central Gujarat and western Uttar Pradesh, which incidentally happen to be the regions where Iffco has its units.

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