Daily Archives: August 16, 2012

Bolivia: Viability of Chapare fertilizer plants questioned

A. D. Hans Soria reports for Los Tiempos:

They doubt of viability of fertilizer plants

The location and the lack of a marketing plan could subtract viability to the plants of fertilizers (urea and ammonia) that will be built in Carrasco, said the analysts Bernardo Prado and Alvaro Rios, who question that the Government has not submitted a study on the subject.

On Monday, the President of YPFB, Carlos Villegas, declared that there are “very advanced” negotiations with Argentina and Brazil, two potential markets for fertilizers.

According to Villegas, the State achieved significant progress in the negotiations with Brazil and Argentina to export to these countries the fertilizer that will produce the plant located in Bulo Bulo, Carrasco province of the Department of Cochabamba, starting mid-2015. [stronghold of the coca growers who have as their leader, current Bolivian president]

“(…) “They have a plan of agricultural production and extension of the agricultural frontier, this is a demand and a production that will be channeled there,” said Villegas at a press conference.

He also noted that the Government expects that the domestic market of fertilizers will demand between 10 and 20 percent of the monthly production.

Urea is a nitrogen fertilizer which is inside raw natural gas that first, passes by a chemical process for ammonia and then by another chemical process for urea.

Villegas explained that with the sale of fertilizer, are expected $340 million dollars of annual revenues.

However, according to Prado, there is no certainty that Brazil and Argentina markets are guaranteed for a surplus production of 500 thousand tons, that is what is intended to produce and highlights that YPFB did not study any market in this respect. [lets not forget how influential are the coca grower federations in Bolivian economic and political life]

“A project where more than $850 million dollars are at stake cannot be limited to a simple statement regarding the obtention of secured markets”, he said.

He also noted that the plant is built in Cochabamba, the center of the country, a region far away from the borders and the markets it’s intended to reach. At this point he noted that YPFB did not present any transport logistics.

For his part, Rios, coincided with Prado to question the location of the project in Carrasco and warned that to carry 80 percent of the production of fertilizers by land to the Brazilian market, for example, “is highly complicated in transport and logistics costs”. [without even considering the regular quota of road blockades, strikes that happen countrywide]

“I think that the location of the plant in Carrasco is more a political location than technical, optimal and economic,” he said.

Both experts agreed of YPFB demanding greater transparency, to verify that the project is feasible technically and economically.

In this regard, expert in industrialization of hydrocarbons and former manager of industrialization of Yacimientos Petroliferos Fiscales Bolivianos (YPFB), Saul Escalera, explained that the project was located in Carrasco taking advantage of the availability of natural gas in that area, which is rich in ethane and methane, also because it is not committed to export to Brazil or Argentina.

ACCORDING TO THE FORMER INDUSTRIALIZATION MANAGER OF YPFB

Missing 3 plants to complete complex

The petrochemical complex of Carrasco not only includes the construction of the plants of fertilizers (urea and ammonia), recently awarded to a Korean company, but also the installation of a plant fertilizer NPK, another of amines and an explosives factory, said yesterday the expert in industrialization of hydrocarbons and former industrialization manager of Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), Saul Escalera.

Escalera, who was part of the project conceived five years ago by a group of professionals of YPFB, stated that if the Government intends to close the circle of the industrialization of hydrocarbons in Carrasco successfully, they must tender and award the construction of the other three plants.

He added that they already have the feasibility studies, which are known by the President of YPFB, Carlos Villegas.

Escalera explained that nitrogen, phosphorus and potassium (NPK) fertilizer plant will cover all the requirements of the producers of fruits, tubers and legumes, located in the valleys Cochabamba; the explosives factory will supply all the ammonium nitrate that needs the national factory of explosives (Fanexa) for the manufacture of dynamite and the amines plant will produce manifolds or reagents for iron concentrate.

Escalera also insist that the Government must tender the other three plants referred to in the draft recalled that for the construction of the total of the petrochemical complex of Carrasco had planned an investment of approximately $1.5 billion.

For its part, last Sunday, President Evo Morales said that the Government had intended to invest $1.1 billion for plants of urea and ammonia, which will cost about $850 million to the awarded Samsung.

PROFITABILITY

After announcing the award of the plants of fertilizers (urea and ammonia) of Carrasco, official information pointed out that the profitability of the project was high and that the investment would be recovered in about three years.

However, based on studies, the industrialization of YPFB, Saul Escalera, former manager said that the value of fertilizer plants could be recovered within a period of five to eight years.

http://www.lostiempos.com/diario/actualidad/economia/20120815/dudan-de-viabilidad-de-plantas-de-fertilizantes_182141_385536.html

So, we are again with serious issues that are crucial to be competitive. If Bolivia intends to use our international reserves, regarded by some people as the achievement of this government, I’d say we must use the best possible technology and advantages across the whole chain to make sure we have markets secured. Political decisions will always impair the sustainability of any project.