Ahmedabad: BASF SE, the world’s largest chemical producer, will set up a petrochemical production hub at a cost of 16,000 crore in Gujarat in a joint venture (JV) with Ahmedabad-based Adani Group, the two companies said after signing a memorandum of understanding on Thursday. The German company will hold the majority in the joint venture, which will invest in the “acrylics value chain", they said. The designated site would be at Mundra port in Gujarat and a feasibility study will be completed by the end of 2019.

The investment will go into the development, construction and operation of production plants including propane dehydrogenation (PDH), oxo C4 complex (butanols and 2-ethylhexanol), glacial acrylic acid (GAA), butyl acrylate (BA) and potentially other downstream products.

The products are predominantly for the Indian market to serve a wide range of local industries, including construction, automotive and coatings, whose growing demand is currently supplied via imports.

“India continues to be a very large importer of petrochemicals given the rapid expansion of the middle class, and this leads to a significant outflow of precious foreign exchange. Our partnership with BASF is a big step forward in enabling our country’s ‘Make in India’ programme, as this partnership will allow us to produce in Mundra several of the chemicals along the C3 chemical value chain that we are currently importing. Mundra’s infrastructure is ideally suited to enable chemicals production, and our ability to deliver renewable power makes this a unique partnership on several fronts," Adani Group chairman Gautam Adani said in a statement.

In line with BASF’s carbon neutral growth strategy, the chemical site in Mundra would be the firm’s first CO2-neutral production site. The companies have developed an overall plan including new technologies and the supply of the site with 100% renewable energy.

Therefore, in addition to the investment outlined in this MoU, BASF plans to co-invest as a minority partner in a wind and solar park, according to the media statement.

“BASF’s intention to invest in a major new site for the acrylics value chain in India clearly demonstrates our strong and long-term commitment to our Indian customers. Together with the Adani Group, we would have the opportunity to provide our customers with high-quality chemicals and support them in growing their business. With our production powered by renewable energy, we would be able to minimize our impact on the environment," Martin Brudermüller, chairman of the board of executive directors, BASF SE, said in the media statement.

Adani Green Energy is one of the biggest companies involved in solar power generation in India. Besides the group has also set up solar PV manufacturing unit at Mundra SEZ. The facility with multi-level infrastructure is optimised for scaling up to 3GW of modules and cells under a single roof.

The announcement comes on the eve of the Vibrant Gujarat Global Summit 2019 where top leaders from Adani Group and BASF are going to attend.

Gujarat accounts for over 50% of India’s polymer production and plastics industry generates demand for petrochemical derivatives, according to official information available on Vibrant Gujarat’s website.

Gujarat has 61% share in national exports of petroleum products, according to the website.

The state is a hub for refinery and petrochemicals. Reliance Industries Ltd, which operates two refineries with a total capacity of over 68 million tonnes at Jamnagar, has set up a huge petrochemical complex as part of its expansion.

ONGC Petro Additions Ltd, set up by state-run Oil and Natural Gas Corp., has also set up a petrochemical complex at Dahej, Gujarat, that houses a houses a dual-feed cracker unit.

Close