The outgoing president of Mexico's National Association of Plastics Industries has expressed doubt about the government's latest plan for financing a new ethylene cracker.
Mexican President Felipe CalderÃ³n said Feb. 18 state oil monopoly PetrÃ³leos Mexicanos would open an auction for its ethane and natural gasoline that would be sold only on long-term contracts and at market prices.
Industry observers believe the government thinks the winner or winners would then invest the $1 billion required to build the cracker and the $700 million for polyethylene and polypropylene plants.
CalderÃ³n said the idea offered Mexico big fiscal advantages. He was speaking at the 50th anniversary of the Mexican Institute of Chemical Engineers.
The plan is an attempt to salvage Pemex's Phoenix Project. When proposed during the regime of former President Vicente Fox, Phoenix aimed to start providing 2.64 billion pounds of ethylene and 1.32 billion pounds of propylene per year, in addition to the PE and PP plants, by 2009.
The project was halted after several years' planning when Pemex and its private sector partners, Mexico City polymer company Grupo Idesa SA de CV, Nova Chemicals Corp. of Pittsburgh, and Indelpro SA de CV of Monterrey, Mexico, failed to agree on feedstock prices.
``This is a very commendable statement from the president,'' said Anipac President Eduardo de la Tijera.
However, he said, it was not the first time Mexican companies pursuing petrochemical projects had been asked to sign long-term contracts for ethane and natural gasoline.
``I don't see a reason to open international bidding for these feedstocks, provided that they can be negotiated at arm's length without the complication of such a procedure.
``It seems to me that once again the interest of the [Mexican treasury] is being given precedence over the possibility of having investment made by Mexican companies readily and for the benefit of the industry.''
He said the auction procedure would delay any decision on the cracker for at least another year ``and I have not seen in my lifetime such a procedure for developing a petrochemical industry in any [other] country.''
He said in countries such as Brazil and Argentina the government negotiated directly with interested parties, beginning with national investors, and did not try to set up ``cumbersome procedures'' that followed a ``particular theory of the cost of opportunity.''
``The real cost of opportunity,'' he added, ``is having our plastics industry supplied with petrochemicals and resins the way others from around the world who are competing with us are supplied.
``Between theory and transparency the industry is slipping away. The importation of plastics [in Mexico] increased 16 percent last year while production increased only 2 percent.''