Petrochemicals industry in Russia hit with draconian measures ,could cost billions to implement

The Government's intention to make polymer packaging for the food safe for the environment has perturbed the petrochemical sector. From 2017 traditional polymers will not be allowed to be used for packaging in Russia, these measures, according to estimates of our sources, will cost the industry up to 10 billion roubles of profit per year, Russia will have to build more capacities for the production of biopolymers for their substitution, more than there are in the rest of the world.

The petrochemical companies are concerned that the government's initiative to transfer to biodegradable plastics for food packaging will bring them billions of dollars in losses. According to the estimates of the sources in the industry, petrochemical production can lose 7-10 billion roubles of profit per year from the prohibition of the traditional polymers. The producers of polyethylene and polypropylene will have to export their products, which now go to the premium domestic market, and this is a loss of 6 billion roubles of operating profit. The exports will be the only alternative for PETF. But the Russian factories will not be able to compete in export markets, the companies will receive less than 35-40 billion roubles of revenue and about 3 billion roubles of operating profit per year and are likely to be closed, the interlocutors believe