Istanbul-based petrochemicals company Bayegan Group plans to boost domestic output of polypropylene by establishing a production facility in Türkiye’s southern province of Hatay, at a cost of approximately $1.9 billion (TL 57.2 billion), according to a report Tuesday.
Bayegan intends to build a facility able to produce 450,000 tons of polypropylene in Hatay’s Erzin district, the company said in a mailed note to Bloomberg.
The facility is expected to meet approximately 20% of the annual polypropylene demand in Türkiye, which varies between 2 million and 2.5 million tons, thus reducing imports of the polymer used in the nation’s famous carpets.
"The investment is in line with Bayegan’s mission of expanding its business across the value chain," it said.
The fixed investment cost of the plant was estimated at TL 27.7 billion in a government decree offering state benefits to the project in January last year, or $1.5 billion at the exchange rate then, according to the Official Gazette.
That was for an annual production of 350,000 tons. The figure increased to $1.9 billion tons as production capacity was revised to 450,000 tons.
The plant in question is expected to enable Türkiye, the top importer of polypropylene after China, to save about $500 million a year, and help it reduce the current account gap, according to Bayegan.
Bayegan is the Turkish distributor of petrochemical products, including polypropylene.
According to the statement, Switzerland-based BGN International, which is an international energy and commodity trader and one of the world's largest liquified petroleum gas (LPG) traders, affiliated with Bayegan, would supply raw materials to the facility.
Underscoring the strength of local demand, another group is already developing a $1.7 billion polypropylene plant not far away, in Adana’s Ceyhan.
Turkish conglomerate Rönesans Holding and Algeria’s Sonatrach are seeking to raise 1 billion euros ($1.1 billion) for the 472,500-ton-a-year project, according to a Bloomberg report from Jan. 10. Bayegan dropped out of the Rönesans-Sonatrach project in 2018.
The firm said it may take on a partner for its own project and is holding talks with potential investors.
"Currently, the project team is actively involved in exploring various options for potential collaborations and partnerships," the company said as part of the statement.
A similar plan by Bayegan in 2012 to set up a $1 billion petrochemical plant in southern Türkiye with a Saudi partner didn’t go ahead.
Bayegan expects to sign an engineering, procurement and construction (EPC) contract soon, and construction would then take 34 months, it said.
Petkim Petrokimya Holding A.Ş., owned by Azeri crude oil giant Socar, is the country's only polypropylene producer and produces approximately 100,000 tons per annum from a capacity of 144,000 tons, according to Pagev, a local organization of plastics producers.