Petroquimica Morelos SA de CV in Coatzacoalcos, Mexico, will be the first of that country's state-owned secondary petrochemicals plants to be put on the auction block.
The plant's output includes high density polyethylene and polypropylene; officials are considering the addition of linear low density PE production.
Energy Minister Luis Tellez announced the planned sale Aug. 20. Details of the bidding process will be released the first week of September, said Jaime Rello Mora, polymers marketing manager at Morelos. He spoke in an Aug. 26 telephone interview.
``It is important and necessary that the company receives resources,'' he said, adding that whoever buys into the plant probably will invest in infrastructure and equipment.
Tellez has said repeatedly that investment in petrochemicals has been stagnant since 1986, and that the plants can compete globally only if investment comes from the private sector.
Morelos has been preparing for the sale. In 1997, seven petrochemicals plants, including Morelos, became financially independent of Pemex Petroquimica, the chemical division of state-owned oil corporation Petr¢leos Mexicana, or Pemex.
Three of the complexes are profitable: Morelos, Petroquimica Cangrejera SA de CV and Petroquimica Escolin SA de CV. All three produce PE resin. The Morelos plant reported 1997 profit of 46.6 million pesos ($5.17 million).
The Morelos complex can produce 220 million to 330 million pounds of HDPE annually, and 110 million to 220 million pounds of PP, Rello said.
Morelos' current directors have identified two projects for possible expansion. One is doubling the installed capacity for HDPE, and the second is installing a swing line to produce HDPE and LLDPE. Initial production of 440 million pounds per year would start in 2000 ``if all goes well,'' Rello added.
In October 1996 the government announced plans to retain a 51 percent interest in all petrochemicals plants. That decision put a damper on interest in the plants, since prospective investors will be limited to minority ownership shares.
In May, Tellez said there had been a ``poor response from international companies in investing in the plants.'' As a result, the department offered a plan that permits greater flexibility by investors and less reliance on the federal government's fiscal planning and budget.
Insiders expect bidders to include Shell Mexico SA de CV, BASF Mexicana SA de CV, or Grupo Idesa SA de CV, all based in Mexico City.
Celanese Mexicana SA de CV first indicated in September 1997 that it was interested in bidding for Morelos. A company spokesman said Aug. 26 that the company still is interested, but is waiting for definite information that will be included in the request for bids.