UFN 3 has been on sale since 2019; government defends resumption of investments by the state-owned company in the sector
THE Petrobras interrupted the sale of UFN 3 (Nitrogen Fertilizers Unit 3), in Três Lagoas, Mato Grosso do Sul. The decision was informed on Tuesday (24.jan.2023). Here’s the full of the press release (75 KB).
The state-owned company stated that it will evaluate the next steps of divestment, “in line with the current Strategic Plan 2023-2027”.
The state-owned company’s plan was published in November, during the former president’s government Jair Bolsonaro (PL), and does not foresee investment by Petrobras in the fertilizer sector. The President’s Government Luiz Inacio Lula da Silva (PT), on the other hand, signals the resumption of public investment, which can be carried out via Petrobras.
Last week, the Minister of Agriculture, Carlos Favaro, declared that the government should resume the national fertilizer policy, with the conclusion of the paralyzed works. As shown the Power360idle factories could increase domestic fertilizer production by 62%.
Petrobras has 3 unfinished units and one at a standstill. It gave up building two units, in Linhares (ES) and Uberaba (MG), and put the other two up for sale: UFN 3 and Fafen-PR, in Araucária (PR). The state-owned company was unsuccessful in attempts to sell the units.
Since 2019, Petrobras has been trying to sell UFN 3. It negotiated twice with the Russian Acron – the only one to present a binding proposal on both occasions –, but was unable to move forward.
The last attempt was anticipated by the then Minister of Agriculture, Teresa Cristina, in early February 2022. Days later, Russia invaded Ukraine, leading to the disruption of fertilizer logistics chains because of embargoes.
The negotiations withstood the war in Ukraine, but not the government of Mato Grosso do Sul.
This is because, without being able to close an agreement for the purchase of natural gas from Bolivia, Acron had proposed using UFN 3 as a mixing and distribution center for imported inputs. His plans did not include the conclusion of the works at the unit, stopped since 2014, nor the local production of fertilizers.
Acron’s proposal provided for investments of R$ 118 million, short of the R$ 1 billion estimated by the State Executive. The works would start in January 2023, with completion expected by November of the following year. The company intended to start, in 2025, the operations of mixing NPK formulations – an acronym for nitrogen (N), phosphorus (P) and potassium (K).
The land where UFN 3 is located was given by the municipality of Três Lagoas to Petrobras. The project also has tax incentives from the State. In both cases, there would have to be fertilizer production at the factory.
Negotiations were interrupted after the state government denied the request to grant tax incentives to Acron’s project.
For this reason, Petrobras has assured the government of Mato Grosso do Sul and the municipality of Três Lagoas that it will require the completion of the unit’s works in the new divestment process.
The state-owned company relaunched the divestment process on May 31, 2022. At the time, Unigel –lessee of two Petrobras fertilizer factories– expressed interest in the asset.
The process entered the binding phase in August 2022. At this stage of the process, interested parties carry out risk assessments of the asset and send proposals to Petrobras.
#Petrobras #interrupts #sale #fertilizer #factory