Petrochemical Co

# Template State Owned Enterprises- Company Overviews OCPA - Ministry of Industry & Minerals Note: All currency figures are in 000's of Iraqi Dinars unless otherwise noted. 1. General Information Company Name: State Company for Petrochemical Industry Sector Fertilizer / Petrochemical Brief Description Manufacturing plant erected in 1976 by Loomis. Main products include ethylenes, chlorine and caustic soda. The Company is divided into 7 units based on products. Revenue in 2002 (Iraqi Dinars '000s) 25398980 # of Employees 3872 Annual Employee Salaries & Bonus 5209364 Company earlier claimed 6.7B ID Headquarters Address Basrah, Khur Al Zubir 2. Company Highlights Significant local demand for products (PVC, chlorine and ethylene). Operating margin of 10 billion ID. This margin will provide a cushion when raw material subsidies are removed. Potential for ISO 9000 certification within 12 months, which would increase export opportunities. 6 months of inventory on hand. No immediate working capital issues. Complete property, plant & equipment rebuild is not necessary. Only spare parts are currently needed. Management believes it can be self-sustaining if gas and electric comes back online. World Bank undustrial analysts believe ethylene plant is worth saving, but all other production lines are uncompetitive and should be shut down. Biggest customer was Iraqi military. Company benefits 10B ID from CPA policy of cancelling inter-governmental debts. Allocated $3M USD for 2H 2003 operating budget and provided with 15 mw off of grid. 3. Facilities Name Province City Grid Damage % Power Needs Main Factory Basra 0.05 25 mw Value of All Plant & Equipment Before War, and Initial Purchase Dates and Prices for Major Items All plants have significant spare parts and repair needs after 13 years of restrictions, but are still operational at limited capacity. Total rehab of facilities would cost $50M USD. Company claims initial construction cost in 1976 was $1.2 billion USD. 4. Products Product Name Unit Measurement Design Capacity Available Capacity 2002 Production 2002 Revenue Ethylene Ton 132000 85000 35070 All ethylene products generated 13.8B ID LD Polyethylene Ton 60000 43000 18425 HD Polyethylene Ton 30000 22000 9289 Chlorine Ton 42000 13000 3127 Caustic Soda 50% Ton 84000 26000 2905 PVC Ton 16000 15000 179 Agricultural films Ton 15000 15000 0 2976000 HCL Ton 4800 4800 371 Description of Importance of Products to Other Iraqi Industries Chlorine needed for water purification. PVC needed for construction. Ethylene needed by plastics sector. 5. Customers Customer Name 2002 Revenue Subsidized (Y/N) Products Sold to Customer and Unit Pricing Iraqi Military Over 50% of total Ethylene products sold at 800K ID/ton, agricultural films at 900K, and chlorine at 250K. Water Authority Other SOEs Exports via Middlement 6. Suppliers Supplier Name 2002 Purchases Subsidized (Y/N) Products Purchased and Unit Pricing German Suppliers Catalysts and addatives Thalut-Emad (Jordan) $1.2M USD Chemicals Nalco (Italy) $750K USD Water treatment chemicals Saja (Jordan) $190K USD Hexane 1 and catalysts Current Payment Terms From Suppliers 7. Imports & Exports 2002 Import Markets for Raw Materials Catalysts and addatives from Germany. Potential Import Markets in Free Market New production units from American and German suppliers 2002 Export Markets for Finished Products Final destination of many sales was unknown since middlemen were used. 2,600 tons of polyethylene pellets were exported to Syria at $510 USD per ton = $1.3M USD. Potential Export Markets in Free Market Middle East and Southeast Asia if production capacity is increased and ISO certification is approved. 8. Competition Description of Competitive Situation Iran, Saudi Arabia and Kuwait all competing (natural gas is main ingredient). Market Share Description 60-90% of local demand, depending on who you ask. 9. Summary of War Damage & Looting of Property & Equipment Description of Damage Minimal damage. Current Operating Status Main facilites not operating. Need security, stable gas pressure and electricity. Water purification facilities are operating, producing 1,000 m3 per hour. Immediate Property & Equipment Needs To Restart Operations Various spare parts. Total Cost to Return to Pre-War Condition 150K ID. 10. Inventory Status Raw Material Status Good. Has raw materials worth 2.1B ID. Months of Material Supplies & Production Rate 6 months worth of inventory on hand and paid for. Immediate Raw Material Needs Steady gas pressure. Finished Products Supply (Units and Value) 11. Fuel & Electricity Needs Description of Fuel Needs 10 million cubic feet per day of natural gas at 25 bar pressure to start production. Will need to ramp to 90 million cubic feet to return to normal production of all products. Description of Electricity Needs 25 mw, comprised of 10 mw per line for 2 lines and 5 mw for misc needs. Will provide this through own generators if fuel can be acquired. 12. Other Needs to Restart Working Capital Needs 550M ID per month in salaries. Other costs not yet quantified. Security Needs Yes, need security to protect property and inventory. Other Needs Technical help to study state of equipment and improvements to be introduced to upgrade capacity. 13. Strengths, Weaknesses, Opportunities & Threats Description of Strengths Sole producer of polyethylene in Iraq. Description of Weaknesses Facilities have been neglected over last 13 years. $50M USD would be needed to completely refurbish plant and produce at design capacity levels. Can not pass ISO certification. Description of Opportunities Export market, especially once ISO 9000 certified. Diversify production. Description of Threats Equipment problems. Some ongoing security issues. 14. Long Term Strategy Description of Strategy Complete overhaul of production lines to improve efficiency. Potential New Products HD and LP polyethylene products, polypropylene, SBR and PVC production. Potential Partnership Opportunities Would like to find international partners, but does not have any particular ones in mind.