Ipiranga Petroquimica S.A. Expansion

completed

REVISED Summary Of Project Information (SPI)Project NameBrazil-Ipiranga Expansion Project     RegionLatin America & the CaribbeanSectorProject No007268Projected Board DateJanuary 31, 1997Company NameIpiranga Petroquímica S.A. (IPQ)Technical Partner and/or Major Shareholders IPQ’s shareholders include Ipiranga Química S.A. (34.1%) and Hoechst do Brasil (34.1%). Several banks own another 24.7% and IFC owns the remaining 7.1%. Ipiranga Química is the holding company for the petrochemical investments of the Ipiranga Group, which is involved mainly in the petroleum refining/distribution and petrochemical sectors. Hoechst do Brasil, a subsidiary of Hoechst A.G., is a leading Brazilian chemical company involved in the production of polymers, specialty chemicals, synthetic fibers and lubricants. Project Cost Including proposed IFC investment The total Project cost is US$389.6 million. IFC’s proposed investment amounts to US$290 million, consisting of an A Loan of US$30 million and a B Loan of US$260 million. The B Loan would consist of two tranches: (i) a US$90 million tranche payable in four years, and (ii) a US$170 million tranche payable in nine years. The first tranche will be used towards restructuring part of the Company’s short-term debt.Location of project and Description of site Expansion of IPQ’s production facilities at Triunfo (37 miles from Porto Alegre in the state of Rio Grande do Sul) to install: (i) a high-density polyethylene (HDPE)/linear low density polyethylene (LLDPE) swing plant with a capacity of 150,000 metric tonnes per year (tpy), and (ii) a polypropylene (PP) plant with a capacity of 150,000 tpy. The Triunfo complex comprises the Copesul naphtha cracker at the core of the facility and six second generation producers, in addition to IPQ. The site is well-connected by road with the major market centers of the São Paulo/Rio de Janeiro and Montevideo/Buenos Aires areas. Description of Company and Purpose of Project IPQ is a producer of HDPE, with a domestic market share of about 35%. HDPE is a plastic resin used in a wide number of household and industrial applications. IPQ’s facilities consist of two HDPE plants with a nameplate capacity of 220,000 tpy. The Company is in the process of completing the construction of a third HDPE plant with an additional capacity of 135,000 tpy. The plant is expected to come on stream in early 1997. IPQ proposes to expand its capacity further in response to an increase in Brazilian and Conesul demand brought about by strong GDP growth and low inflation following the implementation of the Real Plan in 1994, and the greater economic integration of the Conesul region. The proposed expansion will allow IPQ to benefit from the diversification of its product range and to access new end-use application sectors, thereby increasing IPQ’s competitiveness by bringing about greater economies of scale and lower operating costs.Environmental Category and Issues This is a Category B Project according to the IBRD’s environmental standards. The existing plant conforms with all current Brazilian and IBRD standards. The Project will not create any air emissions under normal operation. For emergency cases and venting under process disturbances the facility is equipped with a flare. In common with the Company’s existing plants, the organic and inorganic effluents generated by the Project will be pre-treated on-site to remove oil and grease and to ensure consistent concentrations in the effluent before it is transferred to SITEL (the central wastewater treatment plant for the Triunfo complex). Solid waste, other than polymers separated from water streams and sold to licensed companies for reuse, will not increase significantly. IPQ has carried out public information/consultation for the expansion project based on Brazilian regulation. The expansion project was announced in “Diario Oficial Industria y Comercio” and in “Zero Hora”, both in December 1995. The is available from the Public Information Center.Host country location of environmental documentsTriunfo Petrochemical Complex, Rio Grande do Sul, BrazilDate SPI sent to PIC December 20, 1996For Additional Information contact: Corporate Relations Unit -telephone: (202) 473-7711facsimile: (202) 676-0365Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).