New investments to reshape Pakistan’s petrochemical sector?

GVS looks briefly at the new proposed investment by Engro in the petrochemical sector in Pakistan that will help the country to start exporting petrochemicals to China and elsewhere and reduce the country's dependency on imports in the sector.


Engro‘s Propane Dehydrogenation and Polypropylene production facility

Due to the country’s continued reliance on imports, Pakistan faces a critically negative balance of payments situation, with petrochemicals being one of the most significant imports valued at around USD 2 billion. Currently, Pakistan spends about USD 600 million on the annual import of polypropylene.

Polypropylene resin is used for manufacturing a variety of daily-use consumer products, including woven bags, food and non-food packaging, films, sheets, household containers, battery casings, electrical appliances, pipes & fittings, medical equipment, and a wide range of other products.

To meet these needs, polypropylene has a local annual demand of 500,000 tons with an expected growth rate of 7percent annually. With decades of experience in petrochemicals, Engro Corporation – one of Pakistan’s premier conglomerates – is exploring a potential investment of up to USD 1.5 billion to set up a 750,000 tons Propane Dehydrogenation and Polypropylene production facility at Port Qasim, Karachi.

This new plant would make Pakistan a self-sufficient producer of polypropylene. Engro started to conduct the commercial feasibility of the Polypropylene facility, based on PDH technology, in April 2019.

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

Recently, the group has announced to invest over $30 million to conduct engineering, design, and technical studies for the proposed Polypropylene complex. It has selected HonHoneywell UOP and W. R. Grace & Co. as technology partners to use their licensed process technology for the plant.

Honeywell will provide its C3 Oleflex™ technology and essential engineering design services, in addition to equipment, catalysts, and adsorbents for the plant. It will mark the first use of C3 Oleflex in Pakistan.

The technology is designed to have a lower cash cost of production and higher return on investment when compared to competing for dehydrogenation technologies. Its low energy consumption, low emissions, and fully recyclable, platinum-alumina-based catalyst system help minimize its impact on the environment.

The independent reactor and regeneration design of the Oleflex technology helps maximize operating flexibility and onstream reliability. While announcing the new partnerships, Ghias Khan, President & CEO of Engro Corporation, said, “Engro continues on its journey towards solving the most pressing issues of our time by investing in projects which will serve to be catalysts of growth for Pakistan…this project can be a significant milestone for Engro and Pakistan towards import substitution that will help build foreign exchange reserves, while also enhancing the petrochemicals landscape of the country.”

Read More: Engro Corporation shows 148.8pc growth in profit for 1st quarter 2021

This new project by Engro reflects a strong commitment to further develop its footprint in the petrochemicals vertical. Engro Polymer & Chemicals (EPCL), a subsidiary of Engro Corporation, is currently the only fully integrated chlorvinyl chemical complex in Pakistan and produces poly-vinyl chloride, caustic soda, sodium hypochlorite, hydrochloric acid, and other chlorine by-products.

A few years back, the business was struggling, which put a question mark over the company’s future in the petrochemicals space. However, with an investment of more than Rs 10 billion for 100,000 tons PVC plant expansion and debottlenecking at various production lines, EPCL has achieved a remarkable turnaround and delivered strong business results.

A robust and well-developed petrochemical sector is at the core of industrialized nations across the globe. For Pakistan to progress, the government must create an enabling environment to attract capital from foreign investors and other large local conglomerates in the petrochemicals sector to help achieve import substitution and enhance the country’s exports.

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