IFFCO to invest $100 million in phosphoric acid plant in Senegal
24 Dec 2007
The Indian Farmers Fertilizer Cooperative (IFFCO) has signed a memorandum of understanding with the government of the West African country Senegal for the revival of a 6.6-lakh tonne capacity phosphoric acid plant in Senegal, Industries Chimiques de Senegal, (ICS).
ICS is a joint venture with the government of India holding a 6.97 per cent stake, IFFCO 19.1 per cent and the government of Senegal a dominant 47 per cent.
IFFCO will invest $100 million in the next three years for increasing the production to approximately 600,000 tonne. IFFCO will also provide a loan of 10 million dollars to the company repayable on priority. Under the MoU, IFFCO will handle the existing debt of the company to ensure its repayment to the Senegalese banks and international financial organisations in 15 years and those to the trade creditors in two years.
Restructuring of ICS will improve the availability of phosphoric acid in the country as IFFCO will import bulk of it. It is also expected to have a sobering effect on the international price trend which has been rising for sometime.
ICS currently runs at 30 per cent capacity and has accumulated losses of nearly Rs1,300 crore over the last few years. Loss of production of ICS has contributed to reduction in the supply of phosphoric acid, whose prices are rising steeply. The plant exports 80 per cent of its output to IFFCO under an earlier agreement.
The IFFCO-led consortium had made an offer to inject 80 million dollars in July this year for recapitalisation of ICS but the Senegalese government signed a deal with Gruope Roullier (RG) of France in November this year, which threatened the availability of phosphoric acid to India under the long-term off take contract and would have also led to management control of ICS vesting with the French company.
However, with the intervention of the Indian government, Dr. J S Sarma, secretary, department of fertilisers led an Indian delegation for detailed negotiations, leading to the signing of the MoU between Senegal's minister of mines and industry, and Dr U S Awasthi, managing director, which has now been converted into a legal document.
India is Senegal's principal foreign market, accounting for almost 27 per cent of its exports of chemicals, cotton, fabrics, groundnuts, and calcium phosphate since 1998,
Senegal's main industries include food processing, mining, cement, artificial fertilizer, chemicals, textiles, refining imported petroleum, and tourism.
