The plant with capacity to produce 700,000 tons per year will cost $655 million
KATHMANDU, May 4: The government has finally decided to build a chemical fertilizers plant.
The meeting of National Development Action Committee (NDAC) chaired by Prime Minister Pushpa Kamal Dahal on Wednesday directed the Ministry of Agricultural Development (MoAD) and Investment Board Nepal (IBN) to finalize development modality of establishing the plant with an investment of US$ 665 million.
NDAC is a special unit formed under the National Planning Commission (NPC) for addressing problems faced by development projects.
The factory will have a capacity to produce 700,000 tons of chemical fertilizer annually. It is expected to make the country self-reliant on chemical fertilizers.
Nepal imports around 400,000 tons of chemical fertilizer every year. The plants in the factory will run on natural gas, according to NDAC.
In the meeting, Prime Minister Dahal directed both the agencies to collaborate and decide development modality based on a feasibility study prepared by the IBN within two months.
According to the IBN, the study has give two options on types of plants - one consuming natural gas and the other consuming electricity. The plant consuming electricity is estimated to cost around $ 1,200 million.
“The cheaper option is to install the plant running on natural gas. But the factory itself will not be financially feasible by producing 700,000 tons a year. Therefore, it needs viability gap funding,” IBN Spokesperson Madhu Bhetwal said, adding that chemical fertilizer companies are not financially viable even in India.
On development modality, the IBN has recommended instituting a company promoted by different government agencies like MoAD, IBN, Agriculture Inputs Company Limited and Nepal Oil Corporation (NOC), among others, or select bidders on a competitive basis along with declared VGF.
According to the feasibility report, it takes around three years to build the plant. The project site will be Bardaghat of Nawalparasi if the plant using natural gas is selected.
The report has also envisaged connecting the plant with Gorakhpur-based natural gas storage facility of India. Jaljale of Udayapur and Dhalkebar of Dhanusha are the other suitable sites suggested in the report.
Likewise, the meeting has also directed the Ministry of Culture, Tourism and Civil Aviation (MoCTCA) to take a decision on Detailed Project Report (DPR) of Second International Airport prepared by a Korean company.
The PM also has asked the tourism ministry finalize the development modality of the airport to be built in Nijgadh of Bara as soon as possible.