**Revival of Talcher Urea Plant Gains Momentum with Fresh Loan Assessment**
The initiative to revive India’s inaugural coal-based urea plant in Talcher, Odisha, is progressing as banks prepare to reassess the project for potential lending of up to ₹10,000 crore. This comes after the repayment of approximately ₹4,000 crore in existing loans, according to sources familiar with the situation. The promoters have successfully cleared loans taken in 2021 from a consortium led by the State Bank of India (SBI).
Talcher Fertilizers Ltd, which is a joint venture among four state-owned enterprises—GAIL (India) Ltd, Coal India Ltd, and Rashtriya Chemicals and Fertilizers Ltd, each holding a 31.85% stake, while Fertilizer Corporation of India Ltd owns the remaining share—has been working towards reviving the plant since its initial establishment in 1971.
The repayment was crucial to prevent the loans from becoming non-performing assets, especially since the project has yet to commence operations. The Reserve Bank of India (RBI) regulations restrict banks from tolerating prolonged delays in project timelines. The Talcher facility aims to establish India’s first coal gasification-based urea plant, with an annual capacity of 12.7 lakh metric tonnes. Utilizing coal instead of natural gas is strategically significant, given the stability of coal prices and the country’s substantial reserves of this fossil fuel. This shift is expected to decrease reliance on imported natural gas for urea production, thereby lowering the import bill.
Despite over ₹9,000 crore in loans being sanctioned for the project in 2021, less than half was utilized, and the remaining amount has now been returned. With the loans cleared and the account settled, banks are poised to begin reassessing the project. However, the estimated project cost has risen from ₹13,000 crore to ₹17,000 crore, and the debt-to-equity ratio has been adjusted from 70:30 to 60:40.
The Talcher project has a long history, dating back to its establishment by the Fertilizer Corporation in 1971. Although production began in 1980, the plant was declared ‘sick’ in 1992 due to operational challenges. Revival efforts commenced in 2011, leading to the formation of a joint venture in 2015. Current projections suggest that the plant could commence operations within the next two years.
Delays in the fresh loan assessment have also been attributed to many banks waiting for SBI to initiate its project due diligence before proceeding.
**FAQ**
**What is the significance of the Talcher urea plant revival?**
The revival of the Talcher urea plant is significant as it aims to reduce India’s dependence on imported natural gas for urea production, leveraging domestic coal resources instead. This shift is expected to stabilize production costs and enhance energy security for the country.
