National Fertilizers Ltd (NFL), Engineers India Ltd (EIL) and Fertilizer Corporation of India Ltd (FCIL) have signed a joint venture agreement to set up new ammonia and urea plants with a total outlay of Rs 5,000 crore.

According to a BSE filing, the agreement envisages forming a joint venture company for setting up new ammonia and urea plants of 2,200 MT per day and 3,850 MT per day capacity, respectively at the existing site of Ramagundam Fertilizer Plant at Karimnagar district in Telangana.

The new company will be registered as Ramagundam Fertilizers and Chemicals Ltd.

The Rs 5,000-crore project is expected to be funded in debt:equity of 70:30 per cent. While NFL and EIL are contributing equity of 26 per cent each, FCIL will provide 11 per cent equity. The balance equity is in the process of being tied up.

The joint venture agreement was signed recently in the presence of Ananth Kumar, Minister for Chemicals and Fertilizers, and Dharmendra Pradhan, Minister of State for Petroleum and Natural gas.

The plant will help in increasing the indigenous urea production in the country. The plant with a capacity of 1.27 million tonnes per annum of urea will be based on natural gas as feedstock and is targeted to be completed by 2018.

Natural gas supply for the plant will come from the proposed Mallavram-Bilwara pipeline and water from Sripada Yellampally barrage built over Godavari river.

As per the arrangement, NFL shall provide marketing services to the venture and EIL, engineering, procurement and construction management consultancy services.

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