GAIL, RCF sign MOU for Coal Gasification project

Mumbai, December 28, 2007:GAIL (India) Limited and Rashtriya Chemicals and Fertilizers Limited (RCF) have entered into an MOU for setting up of a coal gasification project by GAIL and utilization of the coal gas produced for setting up a fertilizer plant by RCF at Talcher, Orissa. The MoU was signed here today by Mr. A. K. Purwaha, Director (Business Development), GAIL and Mr. H. S. Karangle, Director (Technical), RCF in presence of Dr. U. D. Choubey, CMD, GAIL and Shri U. S. Jha, CMD, RCF.

As part of MOU, GAIL will undertake the Techno-economic study for setting up a Commercial Coal Gasification Plant for production of Synthesis Gas, and RCF will carry out the techno-economic study for setting up a commercial plant to produce fertilizer by utilizing the synthesis gas from the proposed Coal Gasification Plant.

Speaking on the occasion, Dr. U. D. Choubey, CMD GAIL, referred to the critical role of fertilizers in a predominantly agricultural country like ours and the imperative of providing this input to the farmers at a reasonable price. Gas, he said, had always been a preferred feedstock for fertilizers but there is a large demand supply gap of natural gas and therefore considerable  efforts are afoot to look for alternate sources of  energy. Surface coal gasification, he said, provides a promising alternate source of gas which can also meet the feedstock requirement of the fertilizer industry. This was recognized by both RCF and GAIL and he was confident that the project will be a success.

Mr. U. S. Jha, CMD RCF, termed the MOU as a historic step forward for RCF. He referred to the long association between the two organizations and said that this would mark a giant step forward in their relationship.  Syngas, he said would be of a great advantage to RCF in these days of shortage of gas. He said he was particularly happy to have GAIL as a partner in the business in view of the rapid strides which the Company has been making in the recent past

The project would entail an investment of around Rs. 2400 crore for setting up the coal gasification plant.GAIL had earlier commissioned a study by Udhe India for examining the potential of the project and it is estimated that the project will help produce 7.76 MMSCMD of synthesis gas (equivalent to 3000 tonnes per day of ammonia) and 3500 tonnes per day of Urea. GAIL will focus on the production and marketing of synthesis gas which will be in line with its core function of gas handling.

Both the companies will also jointly evaluate the potential of Coal Gasification for fertilizer industry and provide assistance to each other for successful implementation of respective projects.

About GAIL (India) Limited
GAIL (India) Limited is India's largest natural gas company having a market share of 78% in natural gas transmission and 70% in natural gas marketing. Apart from natural gas transmission, distribution and processing, the Company has diversified business interests in LPG transmission, petrochemicals, city gas projects and exploration and production activities. The Company has presence in countries such as Egypt, Myanmar, China and Oman.

GAIL is one of the leading public enterprises with a consistently excellent financial track record. Turnover and Net Profits during the last ten years has shown a compounded annual growth rate of 14 per cent. The Company recorded a Turnover of Rs. 16,047 crore and Profit After Tax of Rs. 2,387 crore in the year 2006-07.

GAIL owns and operates around 6700 km of natural gas pipeline transmission network with a capacity of 148 MMSCMD and is laying five new natural gas pipelines measuring 5000 km. involving a capex of nearly Rs. 20,000 crore which shall enhance the transmission capacity to around 300 MMSCMD in 2011.

About RCF
RCF is a premier Fertilizer Government Undertaking and the turnover of the company is likely to touch Rs. 5000 crore in 2007-08. The company is consistent profit making fertilizer undertaking of the country. It has been selected to be a part of the Coal Gasification Committee by Ministry of Chemicals and Fertilizers. Department of Fertilizer entrusted RCF with revival of closed fertilizer units at Talcher and Durgapur. As part of study for revival of Talcher Unit, RCF carried out Techno-economic feasibility study considering coal gasification route, which was found economically viable.

Synthesis gas produced in the coal gasification plant will be used in production of ammonia, urea and other chemicals. The project will add to production capacity of 11.55 lakh MT of urea per year. The estimated cost of ammonia –urea project is about Rs. 3200 crore.

Dr. U.D. Choubey, CMD, GAIL and Mr. U.S. Jha, CMD, RCF exchanging documents after signing of MoU for setting up of a coal gasification project by GAIL and utilization of the coal gas produced for setting up a fertilizer plant by RCF at Talcher, Orissa.