South Indian firm Tamilnadu Petroproducts Ltd (TPL) has said that its subsidiary in Singapore, TPL India Singapore Pte, will set up a petrochemical plant in Singapore to manufacture 100,000 MT of normal paraffin on an investment of 110 million U.S. dollars, news website businessstandard.com reported here Thursday.

An agreement to this effect was signed in Singapore recently in the presence of Singapore's Prime Minister Lee Hsien Loong and Kuwaiti Prime Minister Sheikh Nasser Al-Mohammed Al-Ahmed Al-JaberAl-Sabah.

The company's investment through its subsidiary will be 51 percent of the equity while Kuwait Finance House and Singapore's Economic Development Board will hold 44 percent and 5 percent respectively.

The website reported that the decision to set up the unit in Singapore is owing to availability of a long term supply of kerosene and reliability of services like power which is costly in India.

The company is in advanced stage of negotiations with the Singapore Refining Company for an agreement to supply kerosene. Half of the normal paraffin to be produced will be exported to the company's unit in India while the rest will be sold in the open market.

The demand for normal paraffin is expected to increase considerably and industry sources estimate that there will be a shortage of 2,00,000 MT each year till 2010 in South-east Asia and Asia-Pacific.