India is close to joining hands with National Iranian Oil Company to set up a gas-based fertiliser joint venture project for the production of urea in Iran.

As per official sources, feasibility study report is likely to come in soon, after which a final decision will be taken on the issue.

"Our talks are in the final stages," a senior government official said.

"We are also working out the financial viability of the project. We will take a decision in a month," he said.

He also said that the government will come up with a clear policy on overseas joint venture at the earliest to promote more such ventures.

The official said that overseas joint ventures in the immediate future were a necessity to keep a balance between demand and supply.

The official said that the Indo-Oman project, in which IFFCO and KRIBHCO will invest Rs 400 crore (Rs 4 billion) each, has already been kicked off and is progressing well.

Meanwhile, NIOC, which has about 25.44 per cent stake in the ailing Madras Fertilizer Ltd, has given a no-objection certificate to the government clearing the path for divestment.

As per official sources, the government will now speed the divestment procedure of the Rs 1,230 crore (Rs 12.3) MFL which may be complete by the year end.

It is leant that senior officials of the ministries of divestment and chemicals and fertilisers will soon visit Iran to sign a memorandum of understanding on the same.

The long-term fertiliser policy may however bring down the valuation of the company.

"With this, there may be few takers for the company," said an industry expert. The government may announce a special relief package for the company before inviting fresh bids.

"Though no final decision has been taken on the issue but it is being considered," the source said.