Hambana Petrochemicals to start world’s largest single location PET plant at MRMRP

Wednesday, 13 March 2013 01:32 -     - {{hitsCtrl.values.hits}}

Hambana Petrochemicals Ltd., (HPL) yesterday signed a Business Venture Agreement with the SLPA for the proposed project to set up a plant for producing bottle grade polyethylene terepthalate packaging resin.

HPL is among the new ventures approved by the Cabinet of Ministers subsequent to the recommendations by Cabinet Appointed Negotiating Committee with the assistance of Technical Evaluation Committee. SLPA said in parallel to construction of the Magam Ruhunupura Mahinda Rajapaksa Port (MRMR Port) in Hambantota, several investment proposals from prospective local and foreign investors to establish industries and businesses within the port premises have been received.

Commenting at the signing of the agreement, Minister of Ports and Highways (Projects) Rohitha Abegunawardhane stated that this venture marked another historical juncture in the development of the MRMRP in Hambantota in collaboration with private sector investors.

“These developments in the region are sure signs of many direct and indirect employment opportunities for the youth in the area. The right and timely vision clearly depicted in the ‘Mahinda Chinthana’ policy document of President Mahinda Rajapaksa has today received recognition and credibility not only within but also among mega financial and industrial investors around the globe. It is the right time to maximise on these benefits to develop the southern region, which will in return contribute to develop the whole of Sri Lanka in the future,” the Minister said.

SLPA Chairman Dr. Priyath B. Wickrama said that the MRMRP commissioned in 2010 was rapidly reaching its developmental goals since the past three years, whilst starting to offer due capacities to bring prosperity and strengthen socioeconomic development in Sri Lanka.

“These new investments have brought in larger financial investments than the total utilisation for the development of the first phase of the port. It is equally important to see that world class and world renowned industrial giants and investors have expressed their fullest credibility to join hands to work in collaboration with MRMRP,” he added.

Hambana Petrochemicals Limited Director/CEO Abhijit Sen expressing pleasure on commencing business with SLPA stated that the signing of the agreement had brought the first petrochemical downstream project in Sri Lanka to the fast-developing southern region of the country. The project will be on-stream from January 2015.

“We have found MRMRP the best facility to start this industry in Sri Lanka and this is the largest single location PET plant in the world. It would also be integrated subsequently with a PTA plant, which would be set up in the second phase with a capital outlay of US$ 450 million. The total tonnage for the port through this industry in phase I and II is close to four million tons,” he said.

The signing of the agreement for the proposed project to set up a plant for producing bottle grade polyethylene terepthalate packaging resin took place between SLPA Chairman Dr. Wickrama, Hambana Petrochemicals Director/CEO Sen and Hambana Petrochemicals Limited Chairman Jit Warnakulasuriya.

Ministry of Ports and Highways Additional Secretary (Ports) Anuradha Wijekoon, Ministry of Defence and Urban Development Additional Secretary Janaka Kurukulasuriya, SLPA Vice Chairman Indika Karunajeewa, SLPA Executive Director Dr. Sanjaya Sedara Senarath, SLPA Additional Managing Director Norman Weerarathne, SLPA Director (Finance) Shirani Wanniarachchi, SLPA Director (Technical) A.D.T. Gunasekara, SLPA Director (Logistics) D.W. Atapattu, SLPA Director (Security) Major General Sanath Karunaratne, Chief Engineer (Southern Port Development) P.A. Agil Hewageegana and SLPA Deputy Chief Manager (Communication and Public Relations) Nalin Aponso also participated at the occasion.

The investor, Hambana Petrochemicals Ltd. (HPL), is a company owned by Peak Energy (Pte) Ltd. of Singapore. HPL is proposing to set up a state-of-the-art Polyethylene Terepthalate (PET) packaging resin plant. The proposed PET resin plant would have an annual PET resin production capacity of 540,000 Mt or 1,500 Mt/day. PET resin is the raw material used in manufacturing PET bottles and containers which is a popular packaging solution for carbonated soft drinks, water, liquor and various food/non food packaging applications.

This business venture agreement has been signed for an initial term of 25 years and the expected total investment is US$ 137.39 million. Hambana Petrochemicals would require importing raw materials of 453,000 Mt of purified terephthalic acid, 183,600 Mt of mono-ethylene glycol and 10,800 Mt of purified isophthalic acid per annum. As the investor is willing to export the total production, this will lead to increasing port activity by approximately 45,000 TEUs and 180,000 Mt liquid cargo per annum and the annual turnover from this facility will be approximately US$ 1 billion annually.

In addition to the increase of port activity, the proposed plant will generate many direct and indirect employments during the 24 months of its construction period as well as during the plant operations. During the aforesaid steady state of operation, more than 200 qualified persons are expected to be employed by them in various technical and commercial levels. However, as per the expected other benefits in this regard by SLPA, they have introduced the land lease and royalty schedule which is the main and direct revenue proposal of the SLPA. The expected revenue from this schedule will be approximately US$ 100 million.

Lanka Sugar Refinery Company (Private) Limited: Greatly supporting the regional development of the southern region on one hand, the port has already secured US$ 700 million in investments including US$ 220 million from a major Indian sugar producer, Shree Renuka Sugars Ltd. The company has already signed the Business Venture Agreement with SLPA and has formed its subsidiary local company, Lanka Sugar Refinery Company (Private) Limited.

This business venture agreement is signed for a term of 25 years. The initial capacity of this plant is 2000 Mt/, which will be expanded up to 3000 Mt/day subsequently. Raw sugar is expected to be imported by the business venture for refinement at this proposed plant. The company has planned to utilise local human resource to the maximum level and expects to engage a 1,500-2,000 work force during the construction period.

During their steady state of operation, nearly 300-350 are expected to be employed by them in various technical and commercial levels. Apart from the above, nearly 1,000 persons are expected to get indirect employment opportunities through this. The construction work of this plant is expected to complete within 24 months. The expected annul land lease and royalty revenue from this investment will be US$ 63.86 million.

Other Cabinet approved investors

Meanwhile, five other investors are also willing to sign business venture agreements and commence the businesses at the earliest at the Magampura Port. Accordingly, Thatta Cement (cement grinding plant), Hayles Advantis Ltd. (fertiliser bagging plant), McLarnes Holdings Ltd. (warehousing), Agalawatta Plantation PLC (warehousing) and ACE Distripaks (Pvt) Ltd. (warehousing) have expressed interest in commencing business at the zone.

Following the commissioning of the port, MRMRP has been successfully engaged in domestic and transhipment RO-RO operations whilst the inauguration of the second stage sooner this year will commence storing bunkering fuel, making a key component of the functionality of the port project a success. This would be initiated with a view to attract cargo vessels traversing one of the busiest East-West shipping routes for refuelling and services.

The new port will also be equipped with the latest technology to ensure higher efficiency in order to reduce operating costs and improve profitability. Following the successful completion of Phase II of MRMRP, the port will cater as a fully-fledged industrial plus container port.

The commissioning of the Mattala Rajapaksa International Airport in close proximity to MRMRP therefore is also vital in bridging air-sea-cargo and air-sea-passenger ventures together in harmonious collaboration to develop as one air-sea-cargo and air-sea-passenger hub in the future. This features the potential the suburb possesses to be listed amongst the very few global destinations that links a network of air, sea, land and rail routes in close proximity, building an industrial hub for international business.