The Hindu : Business : IFFCO signs MoU with Senegal Government

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Tuesday, Dec 25, 2007
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IFFCO signs MoU with Senegal Government

Special Correspondent

Fertilizer Cooperative to inject $100 million
ICS has accumulated loss of Rs. 1,300 cr.

NEW DELHI: The Indian Farmers Fertilizer Cooperative (IFFCO) has signed a memorandum of understanding (MoU) with the Senegal Government for reviving the 6.6 lakh tonne capacity phosphoric acid plant belonging to the Industries Chimiques de Senegal (ICS).

IFFCO will invest $100 million over the next three years to raise the production to the optimum level.

Under the MoU, IFFCO will invest $100 million in the next three years for increasing the production to the optimum level of efficiency at about six lakh tonnes.

IFFCO will also provide a loan of $10 million to the company repayable on priority. It will also 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.

ICS is a joint venture company with Government of India holding 6.97 per cent, IFFCO 19.1 per cent, Government of Senegal 47 per cent of the equity and others the balance.

According to an announcement made on Monday, restructuring of ICS will improve the availability of phosphoric acid as IFFCO will import bulk of it. It is also expected to have a sobering effect on the international prices which have been rising for sometime.

The MoU was signed by the Minister of Mines and Industry, Government of Senegal, and Managing Director of IFFCO, U. S. Awasthi. The MoU will soon be converted into a legal document.

ICS has accumulated losses of nearly Rs. 1,300 crore. The IFFCO-led consortium had made an offer to inject $80 million in July this year for recapitalisation of ICS but the move suffered a setback after the Senegalese Government signed a deal with Gruope Roullier (RG) of France in November this year.

The agreement with RG threatened the availability of phosphoric acid to India under the long-term offtake contract but would have also led to management control of ICS in the hands of the French company. Secretary, Department of Fertilisers, J. S. Sarma, led the Indian delegation at the detailed negotiations leading to the signing of the MoU.

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