Unigel, a Brazilian chemical company, has enlisted the services of Citi to assist in finding a strategic partner for its ambitious green hydrogen production project in Bahia.
The project, expected to require investments of up to $1.5 billion, aims to raise the necessary funds for its execution amid Unigel’s efforts to maintain financial stability, according to sources familiar with the matter.
The green hydrogen project, the first of its kind on an industrial scale in Brazil, has garnered significant interest, with approximately 20 multinational groups reportedly expressing interest in acquiring a stake in the venture. Unigel intends to sell a portion of the project to secure the required resources for its successful implementation.
While still in the initial stages, the project’s first phase alone demands an investment of $120 million. Unigel has faced financial challenges, leading to the postponement of another major project involving the construction of a sulfuric acid plant in Camaçari, Bahia. The company’s financial difficulties were exacerbated by declining margins in the chemicals and fertilizers sectors, particularly in urea, since the middle of the previous year.
With the sulfuric acid project delayed until 2024, Unigel has suspended payments to its suppliers and is currently engaged in negotiations to establish new deadlines, according to sources familiar with the matter.
The decision to seek a strategic partner for the green hydrogen project aligns with Unigel’s commitment to secure the necessary funding while leveraging the expertise and resources of potential collaborators. Green hydrogen has emerged as a promising solution for clean energy production, offering a renewable and sustainable alternative to traditional fossil fuel-based energy sources.