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Belarus offers India 20%

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Belarus offers India 20% stake in giant potash firm

By KA Badarinath, Siddhartha P SaikiaAug 29 2011 , New Delhi

Belarus has offered to India 20 per cent equity in the world’s largest potash producer, Belaruskali at $6 billion. This offer has come with riders.
But, it has politely declined to consider India’s move to invest in new potash mines in the east European nation.
Belarus has estimated the value of Belaruskali at $30 billion. “They have agreed in-principle to offer 20 per cent equity in the company that would cost $6 billion,” said a government official privy to the development. Also, Belarus has agreed to sign a long-term potash supply agreement with India that imports virtually 6.2 million tonnes annually.
Belarusian Potash Company (BPC) that is the marketing arm of Belaruskali and Uralkali representing Belarus would enter into agreements with India’s Indian Potash Limited (IPL) and Coromandel Fertilisers.
Belarus has agreed to supply 50 per cent of India’s potash requirement through BPC on a long-term basis at a discount. The term contract would be discussed when BPC officials visit India next month. BPC is a joint venture company between Belaruskali with 45 per cent stake; Uralkali with 50 per cent ownership and remaining 5 per cent is held by Belarusian Railways.
India proposes to form a consortium between government-owned, cooperatives and privately fertilizer companies to buy the 20 per cent equity in Belaruskali if the deal sails through. “None of our fertiliser companies can afford to pay $ 6 billion. So, a consortium headed by cooperative fertilizer giant, Iffco and Indian Potash Limited (IPL) will mobilize up to $ 1 – 1.2 billion with involvement of other companies for the acquisition. Remaining funds would be sourced through a dedicated fund floated by Indian government with contribution from banks and financial institutions,” the official said.
Final size of the deal will depend on an independent valuation done by India. A techno-economic feasibility team will visit Belarus to make an independent valuation of Belaruskali.
An Indian delegation headed by Sanjay Singh, secretary (East) in ministry of external affairs, fertilizer secretary Sutanu Behuria apart from finance ministry officials visited Minsk (Belarus capital) last week to hold negotiations with the Belarus government representatives. Belarus first deputy Prime minister Vladimir I Semashko led the country’s team negotiating the deal with India.
Prime minister Manmohan Singh has given the ‘go ahead’ for buying into Belaruskali following a letter written by agriculture minister Sharad Pawar recently on purchase of substantial stake in the world’s largest potash producing company.
PS Gahlaut, chairman and managing director at IPL confirmed that negotiations are going on. “It all depends on Belarus government decision to sell equity in Belaruskali” he told Financial Chronicle.
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