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Haldia Petrochemicals plans $30-bn capex, to set up three petrochem complexes

On Wednesday, September 22, 2021 at 02:35 IST

Haldia Petrochemicals Ltd (HPL), one of India’s largest petrochemical companies with a total production capacity of 700,000 tonnes, plans to set up three petrochemical complexes each in Kakinada (Andhra Pradesh), Balasore (Odisha) and Cuddalore (Tamil Nadu) at a total combined investment of $30 billion (~INR 220,250 crore), a news report said.

The company has envisaged an investment of $10 billion each for the three individual proposed projects which would include land acquisition, plant and machinery and also cost of statutory approvals.

These expansion projects assume significance since India is a net importer of most polymers.

HPL is a flagship company of the Purnendu Chatterjee-owned 'The Chatterjee Group' with its headquarter in Kolkata. Established in the ‘90s as a symbol of industrial resurgence in West Bengal, HPL was the first integrated petrochemical complex in Haldia. With a state-of-the-art naphtha cracker complex constructed in a record of three years, HPL started production in 2000.

Located at Haldia in the eastern Indian state of west Bengal, the cracker has an ethylene capacity of 700,000 metric tonnes / annum and propylene capacity of 350,000 mt/year. The high density polyethylene (HDPE) unit has a production capacity of 330,000 metric tonnes / annum and linear low density polyethylene / high density polyethylene (LLDPE/HDPE) swing unit has a production capacity of 370,000 metric tonnes / annum. The polypropylene (PP) unit has a production capacity of 350,000 metric tonnes / annum.

The report said that HPL is currently working on a strategy to raise funds to finance these projects and evaluating possibilities of roping in a strategic investor or enter into the capital markets through an initial public offering (IPO). The objective of HPL’s fund raising plan would be to part finance the proposed capital expenditure.

Attempts to reach HPL’s officials proved futile. An email sent to the company remained unanswered.

While the investment plan in Odisha was announced earlier, the company, according to the report, has now clubbed this project with the overall capital investment plan to keep in mind its cost advantages.

“India is a net importer of polymers. Expanding capacity either through greenfield or brownfield projects would certainly reduce India’s import dependence. But, looking at the long gestation period for setting up a greenfield project, India’s consumption would also go up. This means, India would require to catch up domestic production in tune with the increase in the country’s estimated production,” said Arafat Saiyed, an analyst with Reliance Securities.

According to the report, the company has already obtained necessary clearances from the National Company Law Tribunal (NCLT) for Nagarjuna Oil
in Tamil Nadu. HPL plans to take off its Tamil Nadu project first as commitments from Andhra Pradesh and Odisha state governments for proposed projects in these respective states are yet to receive. The company is seeking commitments in terms of land acquisition and rehabilitation work, if any, from the aforementioned two state governments.

Envisaging the expansion plan, HPL along with its international partner Rhone Capital had acquired, in July 2020, acquired Lummus Technology, a US-based master licensor of proprietary technologies in refining petrochemicals, coal gasification and gas processing. Lummus Technology is also a supplier of proprietary catalyst equipment and related engineering services.

“The expansion of Haldia Petrochemicals would bring in additional polymers into the market. With large players always keep on offering discounts to attract new business, we may see a build on price competition in polymer business when Haldia’s products from the proposed new units hit the market,” said Vinay Mehta, Partner, Miku Polymers and Plastics Ltd, a Vadodara - based polymer importer, told Polymerupdate.

HPL, according to the report, is trying to design one and implement many projects so that the technology can be transferred to other projects also which will reduce overall cost of the project.


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