The Treasury today (Thursday 17 July) confirmed it will guarantee a £230 million loan for Grangemouth petrochemical plant in Scotland to build Europe’s largest ethane storage tank.
The project will protect thousands of jobs in Scotland and is critical for the long term future of the site.
The guarantee will allow work to start at Grangemouth straight away and the first order for construction materials has already been placed.
This is the latest infrastructure project to be supported by the UK Guarantees scheme which underwrites loans for major infrastructure across as energy, transport, communications, waste and housing.
Chief Secretary to the Treasury, Rt Hon. Danny Alexander MP said:
Over £1 billion of infrastructure projects have now been brought forward as a result of the UK guarantees scheme and £36 billion worth of projects are pre qualified.
Our action is creating the right conditions for more investment in our infrastructure, helping to build a stronger economy and a fairer society across the country.
The Grangemouth guarantee is fantastic news for Scotland’s economic future, and for the UK’s energy security.
Chancellor of the Exchequer, Rt Hon. George Osborne MP said:
The UK Guarantees scheme is a key part of our long term economic plan to equip the whole country with the infrastructure it needs to compete, and is only possible because of the credibility of the UK government’s balance sheet.
The Grangemouth project is the first project of its kind being supported by this radical, innovative approach.
It will provide essential raw materials to industries across the UK and through our action we are helping to secure thousands of skilled, well paid, long term jobs for the future.
Jim Ratcliffe, INEOS Chairman, said:
Without doubt, this is one of the most important projects of recent times in Scotland, with implications to be felt right across the UK, not only for employment but also for manufacturing in general.
Our ability to import US shale gas underpins the future of manufacturing at Grangemouth and across many businesses in Scotland.
It is a vital step towards preserving the long term future of the Grangemouth site and those businesses that depend upon its continued presence in Scotland.
INEOS AG, the owners of the Grangemouth plant, have invested more than £300 million at its Grangemouth site as part of a long term survival plan necessary for the site to manufacture petrochemicals beyond 2017.
The loan guarantee from the UK government now enables it to raise financing on £230 million specifically to cover the import facility and storage tank to be built at the site.
This is a major step forward that ensures the long-term future of petrochemical manufacture at Grangemouth.
The ethane tank will be the largest in Europe and is central to the site’s plans to import shale gas from the USA.
By 2016 Grangemouth will be a shale gas-based facility, essential if it is to compete in world markets beyond 2017.