State-run giant National Aluminium Company (Nalco) has virtually shelved its plans to set up a 3,00,000 tonne smelter and a power plant in Iran due to financial crunch and the reluctance of lenders in providing money due to the country’s “geo-political situation.”

The project was announced in 2007 in which Nalco had planned to ferry bauxite to the proposed project ostensibly from the Indian mines and convert them into aluminium. Accordingly, it had inked an agreement with Iran’s Kerman Development Organisation, but an agreement to form a joint venture hasn’t been floated yet. The original envisaged cost of the project was around Rs 8,000 crore, which has now understandably stands at over Rs 10,000 crore.

When a Parliamentary Standing Committee recently asked the union mines ministry to comment on the fate of the navrata company’s Iranian venture, the ministry conveyed the PSU’s unwillingness to proceed on it saying it had both financial and geo-political constraints.

"The company is not pursuing the project in Iran for the present due to the difficulties to arrange finance from the prospective lenders for the project due to geopolitical situation with relation to Iran,” the ministry told the Parliamentary panel. The PSU’s attempts to rope in the Islamic Bank of Indonesia for funding the project is yet to meet any success. The PSUs other overseas ambitions have also not met with much success either. It’s grand plans to set up smelters in South Africa and in other gulf nations are in the limbo. The African project was billed to be a big one entailing an expenditure of around Rs 15,000 crore along with a 1,200 Mw power plant.

Its proposed project in Saudi Arabia also could not take off was shelved. Of its four international projects announced, only the Indonesian smelter is close to getting started.

Nalco is likely to finalise its coal partner soon. It has planned to set up a 5,00,000 tonne aluminium smelter and a 1,250-Mw power plant at an expenditure of Rs 16,500 crore.