Chinese Government Policy Pushes Chemicals Plant Relocation Activity

The State Council of the People’s Republic of China issued guidance in early September 2017 on the relocation and transformation of industrial sites located near densely populated areas that manufacture or handle hazardous chemicals. The central government guidance, which represents a more hardline government push to relocate hazardous chemical sites near residential areas, stipulates that medium- to small-sized facilities, or those of significantly high risk, have to start plant relocation or modifications by late 2018 and complete the move by 2020. Large and mega-sized facilities have to start relocation or modifications by late 2020 and complete the move (or work) by 2025.

The Chinese government is moving “to overhaul the enterprises that fail to meet standards in safety and minimum distance to residential areas, reduce dangerous chemical incidents, protect people’s lives, and promote upgrading the petrochemical industry,” according to a release on the relocations project guidance posted on The State Council’s website. “By 2025, any unqualified enterprises will be revamped to meet standards, move into standardized industrial parks, or be shut down.”

An IPA article published in September 2016 took a close look at how chemicals companies can effectively manage execution risks for relocation projects in China without eroding project value. IPA maintains research into factory and plant relocation projects in China and Best Practices for chemicals industry owner companies to follow as they are planning or in the early phase of developing a site relocation project. IPA offers evaluation products for capital projects performed globally, including revamp projects in China. In addition, IPA recently kicked off its fourth major study into the capital project market in China. IPA has been conducting China capital project industry studies dating back to 1996.

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