Kathmandu, December 20

The government has hired an Indian consortium to conduct a feasibility study on establishment of a chemical fertiliser plant in the country.

The Investment Board Nepal (IBN) signed an agreement with an Indian consortium led by Infrastructure Development Corporation (IDC) Karnataka to this effect on Friday.

The agreement was signed by IBN CEO Radhesh Pant, on behalf of the government, and IDC’s International Business President Padmanabhan Nair, a statement issued today by the IBN says.

The Karnataka based Indian company will take the support of the Institution of Agricultural Technologists and Shah Consult International to conduct the study.

As per the agreement, the Indian consortium will have to submit a final report on the feasibility study within 12 months of signing the pact.

In the next 12 months, the Indian consortium will have to conduct study on feasibility of establishment of a chemical fertiliser company in Nepal, cost-benefit analysis on establishment of the fertiliser plant, appropriate technology required by the plant, creation of jobs by the fertiliser company and environment impact assessment, says the IBN statement.

Nepal is planning to build a modern chemical fertiliser plant with production capacity of 500,000 tonnes per year. The plant, which will require 50 MW to 350 MW of power, will be built at a cost of $500 million to $1 billion.

The demand for chemical fertilisers in the country stood at 700,000 tonnes in the fiscal year 2011-12. Since Nepal does not manufacture chemical fertilisers, the demand is met entirely through imports. However, due to delay and other problems in imports of the crucial agricultural input, farmers suffer every year.

One of the reasons for drop in production of summer crops this year was shortage of fertilisers triggered by protests in the Tarai and blockade on Nepal-India border points. So, establishment of the chemical fertiliser plant is expected to make the country self-reliant in production of the essential agricultural input and address problems related to supply.

In this regard, IBN had called for expressions of interest from parties interested in conducting the feasibility study on establishment of chemical fertiliser plant on September 16, 2014.

A total of five international companies took part in the bidding. But only three firms — Projects and Development India Ltd (PDIL), IDC and JACOBS Consultancy — submitted proposals.

Of these, only PDIL and IDC submitted financial and technical bids.

A committee led by IBN CEO Pant then evaluated the financial and technical bids, in which IDC emerged at the top.

Following the selection of the consortium as the preferred bidder, IBN had held negotiations with the officials of IDC on the terms and conditions of the contract.