PROJECT

Projects

Summary of Proposed Investment

Project Number

7268

Company Name

DISTRIBUIDORA DE PRODUTOS DE PETROLEO IPIRANGA S/A

Date SPI Disclosed

Dec 20, 1996

Country

Brazil

Industry

Manufacturing

Status

Completed

Sector

Plastics Material and Resin

Department

Gbl Ind, Manufact, Agribus & Services

Environmental Category

B - Limited

Previous Events

Approved : May 1, 1997
Signed : Jan 22, 1998
Invested : May 4, 1998

Project Description

REVISED Summary Of Project Information (SPI)

Project NameBrazil-Ipiranga Expansion Project
     
RegionLatin America & the Caribbean
Sector
Project No007268
Projected Board DateJanuary 31, 1997
Company 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, Brazil

Date SPI sent to PIC December 20, 1996
For Additional Information contact: Corporate Relations Unit -
telephone: (202) 473-7711
facsimile: (202) 676-0365
Environmental 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).

Sponsor / Cost / Location