Engro to invest $31.4 million in FEED study before establishing plant

Engro Corporation, a diversified group of companies, has announced that it will undertake advance studies for setting up a manufacturing plant in the petrochemical sector at an estimated cost of over $1 billion, which will slash Pakistan’s chemical imports and give a push to exports.

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Engro Corporation’s Board has approved an investment of $31.4 million towards conducting engineering, design, and technical studies including a FEED study in relation to a polypropylene facility based on propane dehydrogenation (PDH-PP Project).

The conglomerate intends to establish a plant for the manufacturing of polypropylene resin, which is used in making plastic bags for carrying and supplying fertilizer and sugar to the market, confectionery wrappers, plastic pipes, and other construction fitting material, film, and sheet.

“We are pleased to announce that the board, in its meeting held on April 8, 2021, has approved an amount of up to $31.4 million (approximately Rs4.8 billion) towards conducting engineering, design, and technical studies including a front-end engineering design (FEED) study in relation to the PDH-PP (propane dehydrogenation-based polypropylene) project,” Engro Company Secretary Shomaila Loan said in a notification to the Pakistan Stock Exchange (PSX) on Friday.

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According to the information, “the results of these studies, when completed, are expected to inform the final investment decision in relation to this project, which decision will also be based on a conducive policy environment and arranging the right mix of debt and equity partners at such time.”

A national media platform reports CEO Engro saying that the company was considering setting up a global-scale plant with an installed capacity of 550,000-750,000 tons a year.

According to the statistics, the demand for the chemical is growing at 7.5% per annum.

According to the CEO, the whole development and commercialization of the project may take up to six or seven years.

The company has been looking into developing infrastructure in this field and has been focused on import substitution and enhancing its capability of increasing its export potential.

According to the CEO, Mr. Ghias Khan, the company will import raw material (propane gas) to produce polypropylene resin locally.

Besides, the company might consider exporting surplus production. Neighboring country China is a big importer of resin globally, and Pakistan could benefit hugely by exporting resin to its neighbor.

The corporation’s share price dropped 3.08% on Friday, or Rs9.44, to close at Rs297.49 with trading in 1.3 million shares at the PSX.

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