Phosphoric Acid, Phosphates & Fertilizers Experts

Wuhan bags Rs 13,000 crore fertilizer contract: Signals thaw in India-China relationship

Sep 18: The LSTK contracts for the coal-gasificaition-cum-petcoke syngas project coupled with an ammonia-urea complex have finally been signed with Chinese EPC contractor Wuhan Engineering Co Ltd.
The cost of the project is massive Rs 13,277 crore.
This is the largest contract award to a single Chinese company, and signals a thaw in the relationship between the two countries, after there was a cooling off soon after Section 370 relating to J&K was abrogated.
The cost of urea is going to be more than Rs 30,000 crore per tonne, about Rs 5000 more than average cost of manufacturing or importing urea into India. The extra subsidy bill will be footed by the government of India under the urea retention pricing system.
L&T had contested the award of the ammonia-urea plant to Wuhan but that was set aside.
Comment: The signaling is clear. The decks are being cleared for the meeting between Chinese President Xi Jinping and Prime Minister Narendra Modi in October. This also sends an unwritten signal to public sector companies and others in the private sector that Chinese companies can do business in India. The point to note is that India needs good EPC companies. Except for a handful of domestic EPC players, and a few multinationals, this space can be captured by Chinese players who have now acquired both depth and experience.