Nagarjuna Fertilizers & Chemicals Nigeria Limited

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Mumbai: Hyderabad-based Nagarjuna Fertilizers and Chemicals expects to achieve financial closure for its $2.5-billion petrochemicals and fertilizer projects in Nigeria in the current fiscal, a top official said on Thursday..

“It would be a combination of debt and equity,” R.S. Nanda, senior advisor to company management told Reuters in a telephone interview.

“We are in the process of finalizing the GSPA (Gas Sale and Purchase Agreement)... that should be over sometime in the next month... the final signing is yet to take place,” said Nanda, who was earlier the chief operating officer of the company.

The company expects to complete the project in 2015, he said.

Availability of natural gas at competitively low rates has prompted Indian fertilizer makers to set up plants in Africa.

State-run Rashtriya Chemicals and Fertilizers is setting up a $1.5 billion urea unit in Ghana while it is exploring possibilities to set up a fertilizer manufacturing facility in Mozambique.

Tata Chemicals is investing $290 million to buy a 25% stake in its joint venture project with the government of Gabon to set up a urea manufacturing project.

“Natural gas is readily available in Nigeria and that too at a very competitively low rate,” he said.

New projects, strong growth in FY12

Nagarjuna Fertilizers expects its upcoming oil refinery planned at Cuddalore in Tamil Nadu to become operational in the first half of 2012, Nanda said..

In January, the company decided to de-merge its oil business into Nagarjuna Oil Refinery Ltd and is investing about Rs.700 crore to set up the refinery.

The fertilizer maker, which reported a 17% sales growth in April-June, saw a slight dip in net profit following a shutdown at its Kakinada plant in the state of Andhra Pradesh, he said.

“The plant was shut for about 20 days, because of which the production was lower by about 86,000 tons and there were more of traded product sales... and the margin in traded products is much lower.”

Even after a better monsoon in most of the regions in the country, fertilizer sales would be affected due to shortage of raw material, he said.

“Due to very high prices, DAP (di-ammonium phosphate and potash (supply) is pretty tight in the international market... Hence, growth will not be on the lines of expectations,” he said.

Nagarjuna Fertilizers however expects to report “much higher” growth in fertilizer sales as compared to the industry growth that is seen at 4-5%, he said.

Nagarjuna is setting a customised fertiliser unit at a cost of Rs. 16-17 crore.

Customized fertilizers are tailor-made combination of micro nutrients like sulphur, zinc, boron added to the key items such as urea and di-ammonium phosphate and potash, in a proportion that suits specific crops and soil patterns.

“We expect the unit to get commissioned by end of September,” he said.

Shares of Nagarjuna Fertilizers and Chemicals, valued at Rs.1,425 crore, closed at Rs.31.95 on Thursday, down 4.05% in a weak Mumbai market.

Nigeria signed a memorandum of understanding with Xenel Corp. of Saudi Arabia to build petrochemical and Nagarjuna Fertilizers & Chemicals (NFCL) Ltd. of India to build fertilizer plants in Koko FTZ,Koko, Delta State .

The projects include one petrochemical facility and two fertilizer factories with capacity of 2.5 million metric tons in the southern Delta state and in Lagos, the commercial capital, Oil Minister Diezani Alison-Madueke said today in Abuja, the capital.

Nigeria, holder of Africa’s largest gas reserves, burns off, or flares, most of the fuel it produces along with oil because it lacks the infrastructure to process it. The country in 2009 selected 15 companies including OAO Gazprom, Royal Dutch Shell PLC (RDSA) and Chevron Corp. to participate in its development plan. It has yet to announce the final outcome.

The new plants will “set the tone for final elimination of gas flaring,” President Good luck Jonathan said today in Abuja when he unveiled an industrial investment agenda. “Full implementation of the entire gas master agenda will result in about $25 billion worth of investments in gas processing, transmission and downstream gas utilization project” over the next few years.’’

Nigeria, Africa’s most populous country and the continent’s top oil producer, hopes to attract over $10 billion of foreign investment in 10 new plants in the petrochemical and fertilizer industries, Alison-Madueke said.

The petrochemical and fertilizer plants are expected to cost $3.5 billion and $2.5 billion, respectively, and the projects are expected to be completed by 2014, according to the companies building the plants.

Wednesday, July 27th, 2011

(L-R) Delta State Governor, Dr. Emmanuel Uduaghan, Group Executive Director, Gas and Power, NNPC Dr. David Ige and Matouq Jannah, Vice Chairman Xenel Group Saudi Arabia at the commencement of site survey for the planned Petrochemical plant/ Fertilizer plants in Koko Delta state—during the week.

A major step in the activation of President Good luck Jonathan’s Gas Revolution agenda was taken during the week when a team of oil and gas experts and foreign investors arrived the historic city of Koko in Warri North Local Government Area of Delta State to commence preliminary site inspection of the planned Petrochemical plant and Gas processing facilities envisaged to emerge as Africa’s largest industrial complex.

Led by the Group Executive Director, Gas and Power of the Nigerian National Petroleum Corporation, NNPC, Dr. David Ige, the group also include experts from Xenel of Saudi Arabia, Nagarjuna of India, Chevron Nigeria Limited, Sahara Energy, Nigerian Ports Plc and officials of the Delta State Government.

The massive undertaking which is projected to generate up to $16billion investment entails the construction of 1.3million ton per annum Polypropylene and Polyethylene plant to be built by Xenel in concert with NNPC and other investors.

Nagarjuna will construct three fertilizer plants each with capacity of 1.3 million tons per annum all to be located within the Koko Free Trade Zone. The India leading agro processing company will also build blending plants across the country including Delta State to ensure the blending of fertilizers to align with the soil requirements across the various agro zones in Nigeria.

Royal Blessing: Group Executive Director Gas and Power, NNPC, Dr. David Ige being received by the Olaraja of Koko, Chief Victor Nana when he led a team of international oil and gas expert to commence site survey for the planned multibillion dollar Petrochemical plant in Koko, Delta State.

It is envisaged that the approach will enable improved yield which in turn will galvanize numerous agro and food processing industries around the locality of the blending plants-creating industrialization in otherwise rural areas. Already the Chevron/NNPC JV is programmed to develop the gas to supply the fertilizer plants.

The Koko petrochemical plant and fertilizer facilities will be supported by a massive Central Processing Facility, CPF, capable of processing 1billion cubic feet of gas per day. This CPF alongside the others will be the brain-box for the whole industrialization agenda. At these CPFs, wet gas from the wells will be gathered and processed, producing the dry gas and natural gas liquids that will be feedstock for the fertilizer, power and petrochemicals plants.

Speaking at the end of the preliminary aerial survey of the entire Koko Free Trade Zone, Dr. Ige stated that the multibillion dollar CPF will be executed by some indigenous companies which include Oando and Sahara Energy alongside Shell, Chevron and the NNPC.

“This is the beginning of a massive industrial revolution not only for Delta state but the entire nation anchored on petrochemicals. Our expectations going forward is that over the next few weeks NNPC in concert with the state government and the investors will move into top gear ahead of the planned engineering works in the months and years ahead,’’ Dr. Ige stated.

Receiving the Team in his palace the Olaraja of Koko, Chief Victor Nana amid cheers and conviviality from the appreciative Koko community thanked the NNPC and the foreign investors for taking bold steps to actualize what locals have dubbed the Koko dream.

The Monarch pledged the commitment of indigenes of the community to provide 100 percent cooperation to the NNPC and all stakeholders towards the realization of the project.

Similar sentiment was expressed by Hon. Friday Ekpen, the Chairman of the Koko Youth Association.

Also speaking, the Delta State Governor, Dr. Emmanuel Uduaghan expressed delight at the activation of the project also called on the Federal Government to accelerate the planned dredging of the Koko Port waterways to allow for the entrance of heavy vessels in good time for the takeoff of the project.

The Governor however hinted that the State may be compelled to take up the dredging project on behalf of the Federal Government to fast track the planned construction of the petrochemical plant.

Uduaghan described the Koko dream as a project capable of transforming the economic landscape of not only Delta state but the entire nation.

Matouq Jannah, head of the Xenel delegation enthused that the Corporation has the experience and competence to transform the Koko dream into a massive reality.

“ We have done this in Saudi Arabia in the 1970s and early 1980s so nobody can tell me that we cannot do the same in Delta State,’’ Jannah expressed.

Also Kovvuri Dharudu, Vice President Commercial, Nagarjuna Fertilizers and Chemical Limited stated that his company is determined see the project to fruitful conclusion in line with the dreams and aspirations of President Good luck Jonathan’s Gas Revolution Agenda.

Nagarjuna Fertilizers and Chemicals, the flagship company of the Nagarjuna Group, plans to set up an urea manufacturing plant in Nigeria. This would be Nagarjuna Fertilizers’ first foray into Africa.

Though the plan is in a nascent stage, the company plans to invest about Rs 5,000 crore. For this, it would set up a joint venture (JV) with a local partner. The plant would have a one million ton capacity.

The African countries want India investors to invest in agriculture and allied fields. Gas, critical for urea production, is available aplenty. “There would be scope to sell the produce domestically or import to India,” said K S Raju, chairman of Nagarjuna Group.

“We are working out the modalities for the African foray. This would take some time,” he added.

The group is also planning to expand its feeds and fuel stocks segment. As part of this, it is planning a JV in Germany for manufacturing chemicals for solar energy and semiconductor applications. The company will spend about Rs150 crore for this. “We expect to complete the formalities by December,” he said.

For this, the company would invest in Nagarjuna Mauritius, a wholly-owned subsidiary. Then, the amount would be re-invested in Nagarjuna Spawnt GmbH in Germany. “There is a growing market for these chemicals in solar applications,” he said.

Following the announcement of a nutrient-based subsidy (NBS) mechanism for non-urea fertilizers, the group is setting up a 100,000-tonne customised fertiliser unit in Kakinada. This would entail an investment of Rs.20 crore to Rs.40 crore.

The facility would be ready in a year. The company would sell the products in Andhra Pradesh first, Raju said.

The Indian government is yet to bring urea under the NBS regime. However, announcements were made to this effect in the 2009-10 Budget. The present pricing policy for urea expired on March 31 and a new policy is being formulated. It was expected that the new policy would be favorable to urea manufacturers, he said.

It recently signed a memorandum of understanding with NMDC for collaborative projects. NMDC would use its mining expertise and Nagarjuna its experience in fertilizers for the joint projects, he said.

In 2009-10, Nagarjuna Fertilizers achieved the highest ever sale of manufactured urea of 1.5 million tonne, surpassing the previous best of 1.39 million ton last year. The total urea sales, manufactured and imported, were at 2.11 million ton during the year, compared to 2.3 million ton during 2008-09.

While net sales were 1,987.91 crore (Rs.2,371.9 crore), profit after tax stood at Rs.66.37 crore (Rs.27.93 crore last year).

Jonathan Unfolds U.S.$25 Billion Gas Revolution Plan

Nigerian Agip Oil Company (NAOC) and Oando Nigeria Plc are to jointly build a $3-billion Central Gas Processing Facility (CPF) in Nigeria, as President Good luck Jonathan Thursday unfolded plans to attract $25 billion worth of investment into developing the country's gas infrastructure and create about 600,000 new jobs.
The CPF project, which will be sited in Obiaruku, Delta State, is billed to be completed in 2012.

The president made government's plan known during the unveiling of its gas revolution agenda at the Banquet Hall of the State House, Abuja.
This is part of Federal Government's ambitious agenda to fast-track Nigeria's industrial rebirth through a gas revolution program that would raise domestic gas supply to over 10 billion cubic feet per day by 2020 from the current level of 1.0 billion cubic feet per day, as well as end gas flaring.
The government also announced that it had signed a Memorandum of Understanding (MoU) with Saudi Arabia's Xenel Industries Limited to construct a world scale petrochemical plant also in Koko Free Trade Zone (FTZ), Warri Delta State with an output capacity of about 1.3 million tons per annum.


The domestic gas utilization drive would also see Indian firm, Nagarjuna Fertilizers and Chemical Limited, team up with United States oil major, Chevron Nigeria Limited, to build five fertilizer blending factories across the geo-political zones of the country. The factories, according to the facilitators, would utilize a substantial volume of the country's huge gas resources.

In his remarks, Jonathan said the proposed gas initiative would generate over 100,000 engineering design-related jobs, as well as about 500,000 direct and indirect jobs in construction, logistics fabrication and agriculture.

"Today's event marks the beginning of a fulfilling journey for Nigeria to move into the league of nations which have successfully leveraged on the advantage derivable from their abundant natural gas to positively impact on the lives of their citizens.
"Based on the agenda, it is our expectation that by 2014, we would have positioned Nigeria as the regional hub for gas-based industries of fertilizers, petrochemicals and methanol.

"The focus is to catalyze the industrialization of the country by seeding in a few investments that have the highest potential of far-reaching multiplier effect on the economy. This agenda is expected to bring an end to gas flaring as we hope to monetize this. By 2014, we expect to have placed Nigeria on the pedestal as a regional hub for gas based industry," the president said.

The Federal Government launched a gas master plan in 2008 under which oil companies operating in the country were required to make available a certain percentage of their gas production to the domestic market for electricity generation and fertilizer plants.
According to Jonathan, "the full implementation of the gas master plan agenda would result in about $25 billion worth of investment in gas prospective transmission and downstream gas utilization project."
He added that "the petrochemical industry would provide us with the potential to manufacture low-end plastic and packaging products and also very high end products."
The president noted that Nigeria had proven gas reserves estimated at 187 trillion cubic feet (tcf) and a further undiscovered potential of about 600 trillion cubic feet (tcf).

Nigeria had in 2009 shortlisted 15 firms including Russia's Gazprom, E.ON Rhugas of Germany and Royal Dutch Shell to build three major gas processing facilities in the country.
Also speaking at the event, Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, said in order to grow the country's gas potential, the Federal Government was developing the hydrocarbon potential in other inland basins in addition to reserves in the Niger Delta and offshore basins.

According to Alison-Madueke, between April 2010 when Jonathan launched an aggressive refocus on these various basins and now, about 531 square kilometers of seismic data had been acquired in the Chad basin.

She added that the Federal Government would spend $1 billion on oil exploration campaigns in the Chad, Gongola/Yola, Sokoto and Anambra Basins, as well as the Benue Trough over the next five years.
"The industrialization agenda would not only form the catalyst for a major re-industrialization of Nigeria, but will result in the most significant inflow of Foreign Direct Investment (FDI) of over $10 billion between 2012 and 2014, when all the plants become operational," the minister said.
She added that "with the dredging of the River Niger, we will be able to move Liquefied Petroleum Gas (LPG) around the country, bringing gas to the East, West and Northern parts of the country."

Chief Executive Officer and Managing Director of Oando Plc, Mr. Wale Tinubu, said the gas revolution agenda of the government was a marked realization of the value of the private sector driven initiative in industrializing Nigeria.
He explained that the Federal Government had realized the need to engage the private sector in its agenda to turn around the fortunes of the country, adding that the project would be completed on schedule.

Xenel is a diversified company based in Jeddah, Saudi Arabia. It was founded in 1973 by the four sons of Ahmed Alireza, who headed a locally renowned House of Alireza.
The company has established multiple joint ventures with international companies and in the process built expertise in energy, construction, infrastructure development, healthcare, industrial services, information technologies, logistics, real estate and global investing.

On the other hand, Nagarjuna Fertilizers and Chemicals Limited is a leading manufacturer and supplier of plant nutrients in India. It is the flagship company of the Nagarjuna Group, which commenced operations in 1985.
It currently has an asset base of around Rs.21 billion and has the single largest private sector investment in Southern India.