DH Fertilizers Limited Ammonia Storage and Filling Facility

Objective
Setting up of ammonia storage and filling facility in Karachi to cater the customers in Southern region

Types of Services
Filling of Small Ammonia Cylinders @ 22 Kgs - 70 Kgs Capacity Filling of large sized Cylinders @ 450 Kgs Capacity Filling of Bowzers @ 5 MT 20 MT capacity Direct supply of ammonia from DHFL to customers (to be finalized) Import and supply of Ammonia in case of ammonia shortage Cylinder Testing Facility Aqua Ammonia supply (in future; not accounted for in proposal)

Market Study

Ammonia Sales 2012 and 2013

2012 Ammonia Sales in M.Tons Anhydrous 2013

Aqua 2140

Anhydrous 3616

Aqua 2191

Overall

2176

Sindh

706

945

1013

937

DHFL Sales Mtons Jan Retail Mode Feb Mar Apr May Jun Jul Aug Sep Oct Total

HYDERABAD
JAFFARABAD KARACHI LARKANA

6
5 15 0

0
0 18 0

15
7 41 0

25
0 24 0

20
5 43 5

10
3 17 3

6
2 32 1

21
0 29 0

0
5 25 0

0
0 21 0

104
26 265 9

SUKKAR
Sub Total Bulk Mode KARACHI Total Anhydrous Ammonia Sales Aqua Ammonia KARACHI

31
57 24 81

0
18 46 64

3
66 92 158

10
60 68 128

23
97 44 141

17
50 49 99

0
41 45 85

0
50 50 99

0
29 44 73

0
21 64 84

84
488 525 1013

60

90

32

89

76

112

168

83

112

115

937

Major Bulk Ammonia Customers

- Anhydrous
S No Name No. of Tanker Capacity Tons Expected Ammonia Demand, M. Tons / Year

Kamal International Services (Supplies to Pakistan Steel & other industry) International Steels Ltd

22

50

1 (Hired Tanker)

22

490

- Aqua
S No Name No. of Tankers Capacity Tons Expected Ammonia Demand, Mton per Year

Kamal International Services (Supplies to various industry) Shahzad Traders(Supplies to various industry)

1 (Hired Tanker) 1 (Hired Tanker)

30

260

30

824

Potential Market in South Region

S Name No 1 Existing Competitors Total Sales Customers Sales, Expected, MTon / Year MTon / Year MTon / Year 488

Retail

350

838

Bulk

525

120

645 1483 (1686)

Total * Jan-Oct (annual)

1013* (1216)

(470)

Ammonia Storage Capacity at Site

 Ammonia Supply to South Region (DHFL plus Competitors) = 1700 MT per annum Max. Supply from DHFL = 158 MT in March Estimated Demand per day = 6 MT Proposed ammonia storage capacity (9 days) = 54 MT Different Storage Options (at 55 oC) One storage tank of 55 MT (100 m3) Landed cost: Rs. 14.6 Million Three storage tanks of 22 MT (40 m3); cost of three 22 MT tanks: Rs. 18.3 Million Flexibility of starting with one storage tank and increase in multiple of 22 MT. Four ISO tanks of 13 MT (24 m3) Landed cost Rs. 18.4 Million Flexibility of increase by multiple of 13 MT Same ISO tanks can be used for import of ammonia. Relevant Information: At DHFL cylinder filling capacity per day is around 450 small cylinders and 2-3 bowzers of 22 MT.

Different options
Option 1
Install 1 x 55 MT ammonia storage

Option 2
Install 3 x 22 MT Storage Tanks Dedicated 1 ammonia road tanker @ 20 MT capacity; ammonia loading from DHFL and unloading in storage tanks. Cylinder/bowzers filling Cylinder Testing

tanks
Dedicated 1 ammonia road tanker @ 20 MT capacity; ammonia loading from DHFL and unloading in storage tanks. Cylinder/bowzers filling Cylinder Testing

Different options
Option 3
Install 4 x 13 MT ISO tanks

Dedicated 1 ammonia road tanker

@ 20 MT capacity; ammonia loading from DHFL and unloading in storage tanks. If tanker to be used for overseas ammonia due to transportation. frequent (Risk

rigging;

specialized rigging requirement)

Cylinder/bowzers filling Cylinder Testing

Different Options (Continued)

Option 4
Import of Ammonia in ISO tanks from M/s Sharjah Oxygen Company UAE Unloading in Storage Tank at site. As per quotation from M/s Sharjah Oxygen Company UAE : Supply of ammonia by sea in ISO tanks @ 12 MT capacity- CNF Karachi price of US $ 1400 per Ton. A refundable cash deposit of US $ 40000 per tank. Tank on 5 days free rental basis, after 6th day rent $ 50 per day.

Option 5
Import of ammonia in 60 Kg cylinders (90 cylinders in 20 ft container) by sea Quote from M/s SOC Empty cylinder price @ $ 245 per cylinder; to be purchased for refilling. Gas price $ 1600 per MT CNF price of consignment US $ 32000 (for 5.4 MT) for 90 cylinders

Different Options (Continued)

Option 6
DH to provide storage facility of 55 MT at site DH arrange hired lorry for transport of ammonia 20 tons from plants site Private party Establish and operate proper filling site at jointly agreed location at their cost. Provide bank guarantee as security of product stored in the storage tanks at site by DH. Sell ammonia in cylinders and bulk from the site in the allocated territory. Option 6 (a) DH provide ammonia in the storage tank at a certain price. Pay to DH on weekly basis for the quantity of gas sold from the storage tanks. Option 6(b) DH provide ammonia in the storage tank DH decides selling price Operator sell ammonia at DH price to the customers in the territory DH to pay operating and service charges to the operator Cylinder Testing should be done by M/s SOL

Specs 1 100 m3 (55 MTon) Ammonia Storage Vessel w/o GST

Bharat Tanks, India Rs. 12 million (CNF Karachi) Landed Cost = Rs. 15.6 million*

CIMC, China Rs. 11.21 million (CNF Karachi) Landed Cost = Rs. 14.6 million

Ravi Green, Pakistan Rs. 15.2 million (Ex works LHR) without instruments

Fouz Engg, Pakistan Rs. 15.5 million (Ex works LHR) without instruments

1 40 m3 (22 MTon) Ammonia Storage Vessel w/o GST

Rs. 5.85 million (CNF Karachi) Landed Cost = Rs. 7.6 million*

Rs. 4.8 million (CNF Karachi) Landed Cost = Rs. 6.1 million

Rs. 7.5 million (Ex works LHR) without instruments

Rs. 7.5 million (Ex works LHR) without instruments

1 24 m3 (13 MTon) Ammonia Storage Vessel w/o GST

Rs. 3.6 million (CNF Karachi) Landed Cost = Rs. 4.6 million (ISO)

Rs. 4.9 million (Ex works LHR) (Storage Tank) without instruments

Rs. 4.4 million (Ex works LHR) (Storage Tank) without instruments

* Design pressure is 265 psig while for other vendors it is 400 psig

Sr. No.
1 2 3 4 5 6 7 8 Storage tanks (M/s CIMC China)

Item

Cost, Million Rs. Option 2 Option 3 Option 1 3 x 22 MT 4 x 13 MT 1 x 55 MT (Total 66 (Total 52 (Total 55 MT) MT) MT)
14.6 8.0 18.2 4.0 6.1 2.0 1.5 16.0 18.3 8.0 18.2 4.0 6.1 2.0 1.5 16.0

Option 6 1 x 55 MT (Total 55 MT)

Unloading/loading system for bowzers including pump/compressor Cylinders filling system including pump, piping, valves, 2 PCVs etc Electrical Installations (cables, swtich gears, MCC) Bowzer for transport (1 in number) Instrument Air Compressor (Oil free compressor) Cylinders testing facility similar to the existing setup at DHFL

18.4 14.6 12 (incl O/H 8.0 crane) 18.2 2.0 4.0 1.5 6.1 6.1 2.0 - (Third Party 1.5 should arrange testing) 16.0 3.5 -

Area required (16 Kanal) @ Rs. 1 Million / Kanal and location selection for system installation Civil construction including dyke foundation for storage tanks, 9 ramp for cylinders unloading / loading, Water Tank shed and pad for cylinder storage 10 Offices, Operator Rooms, Store, Secuity Office, Canteen, Toilets etc. 11 Water Cooler & Service Water 12 Office Appliances 13 Material / Procurement Transport Van 14 Emergency Power generator (60 kW) 15 Emergency response plan, PPEs, eye wash & showers, foam suppression system 16 Weighing bridge (30 MT) Approvals required EPA 17 Explosive department Other ?? 18 Operation, Lab, Maintenance and Sales staff Sub Total Contingencies (5 %)

15.0

15.0

15.0
-

7.0 1.0 2.0 3.5 2.0 1.7 2.5 1.0

7.0 1.0 2.0 3.5 2.0 1.7 2.5 1.0

7.0 1.0 2.0 3.5 2.0 1.7 2.5 1.0

1.0 0.5 1.7 2.5 1.0

106.1 5.3

109.8 5.5

113.9 5.7

42.4 2.1

Total

111

115

120

45

Operating Cost (Options 1,2 & 3)

1. Utilities Cost = = Rs 0.422 million per month 16 hours Working (2 eight hours shifts) Power from WAPDA = Rs 0.134 million per month Power from Emergency Generator = Rs 0.288 million per month Total Cost - Rs 0.422 million per month 2. Manpower Cost = Rs 0.620 million per month
Site Manager / Incharge = 1 Office Supervisor = 1 Sales, Procurement & Accounts = 1 Security Staff = to be decided Cylinder / Tanker Filling Operators = 4 per shift Maintenance Electrician = 1 Pipe fitter = 2 Millwright = 1 Supervisor = 1 Crane operator = 1 Helpers = as required Cylinder Testing Pipe fitter = 2 Painter = 1 Helpers = as required Rs. 100,000 Rs. 30,000 Rs. 50,000

Rs. 200,000 Rs. 25,000 Rs. 50,000 Rs. 25,000 Rs. 40,000 Rs. 35,000

Rs. 50,000 Rs. 15,000

Financial Model

Cost of Ammonia at Source = ??? Cost of Ammonia at site = ??? Transportation cost = ??? Capital Expenditures
Option 1 Option 2 Option 3 Option 6 = Rs 111 million = Rs. 115 million = Rs. 120 million = Rs. 38 million

Operational Costs (Utilities plus Manpower) = Rs 1.04 million per month (Options 1, 2, 3) = Rs. 0.3 Million per month (option 6) Annual cylinder filling service charges to be paid to M/s SOL are estimated as ~ Rs 30 million (based on 1216 MTon Ammonia sales per Year @ Rs 25/Kg) for Option 6.

Approvals

EPA
Explosives department Ministry of Interior / Trade Others (Rescue Department / Civil Defense / Fire Fighting) ??

The various options have been studied for setting up of Ammonia storage and filling facility including operation and maintenance.

Cost estimation has been done based on quotes from renowned foreign and local firms. However, the acquisition of land and approvals from relevant agencies may be arranged accordingly.
Storage capacity of 55 MTon has been determined as per market demand. The capacity may be enhanced depending on the market situation in future.

Major Milestones
Feasibility Study Approvals from GOP: Explosive department; IEE (EPA), Other approvals required to be ascertained. In case of ammonia import, as per Ministry of Commerce no license is required. Land Acquisition : Away from residential and populated industrial area. For site selection, separate study is required. Civil Construction

Procurement of Equipment/machinery/Customs clearances

Mobilization of Manpower Ammonia Transportation from DHFL to site; to be outsourced Installation phase Commissioning Operation & maintenance Safety and Security Requirements

Sale/Marketing

Conclusion It is imperative to install storage and filling facility in Southern area to sustain and improve our ammonia market share. Storage capacity of 55 MTon has been determined as per market demand. The capacity may be enhanced depending on the market situation in future. After in depth analysis of proposals from renowned local, Indian and Chinese vendors, the storage tanks are recommended to be purchased from China (M/s CIMC) whereas pumps and compressors would be of US / European origin. Ammonia Transportation would be outsourced.

Conclusion DHFL has the requisite capability to set up and operate ammonia storage, filling and testing facility. However, due to current situation, a private party may be considered for setting up the filling and testing facility including O&M. Ammonia can be imported from Middle East or other countries in case of shortage or when international prices are low. Delivery Time for the Tanks from China is 120 days ex-works ready after 30% Down payment receipt.