IQBAL KIDWAI
Global chemical industry is a $4 trillion enterprise that impacts nearly every sector of the economy. We find chemical businesses in virtually every nation, driving innovation in six continents and supporting more than 20 million jobs.
Unfortunately, due to absence of even a single cracker complex, down-stream industry of Pakistan is dependent on imports. India established its first cracker in 1992 and currently it owns 8 crackers, Iran despite the sanctions has been able to put in place seven, Singapore owns five huge capacity state of the art crackers, Saudi Arabia owns twelve. Pakistan chemical imports constitute around 17% of the total import bill. Although we have made considerable progress in basic inorganic chemicals like Soda Ash, Caustic Soda, Sulphuric Acid and Chlorine with sufficient production capacity, however the lack of availability of other chemicals including petrochemicals leads to dependence on imports which surely does not benefit the economy. The chemical imports in 2015 amounted to over USD 5-6 billion and each year there is an average increase of 5-8%.
A key pre-requisite for any chemical industry is Petrochem-Naphtha Cracker Complex. With the provision of Naphtha Cracker Complex or Crude- Naphtha Cracker Petrochem (CNCP) from Pakistani context, the downstream of chemical industry will move and hundreds of new chemicals will be produced locally with fresh doses of investments. With a CNCP facility installed, targeting high value chemicals in the initial phase, the imports would gradually decrease with a single first year impact of around USD 2-3 billion worth of import substitution. This will be followed by a multiplier effect with the growth of more downstream chemical industry as more feedstocks become available from the Cracker facility. An estimated 50,000-60,000 additional jobs would be created within 3-5 years of operationof Crude-Naphtha Cracker-Petchem facility.
Pakistan Chemical Manufacturers Association- PCMA, a valued, trusted apex body of Pakistan Chemical Manufacturers is working to achieve competitiveness through growth and import substitution. PCMA has created a concept paper for first ever CNCP of Pakistan. Owing to its high cost (around USD 3-5 billion) the members of PCMA cannot take on this project from their resources. Being a crucial project of strategic importance for Pakistan, that will tap and unleash unlimitedopportunities of investment in extremely viable businesses (mostly SMEs) in back-ward & forward integrations.This project may therefore be taken up at State level as was done in India & China where most of these projects were established in public sector, initially.
PCMA concluded a delegation of 15 representatives of key chemical companies to Tianjin &Beijing in China (05-11 Nov 2016).The delegation developed good working relations with the key chemical companies in China. TCC China for example is aware of our CNCP project and is willing to take in on. It may be our net win if we are able to include Pakistan’s CNCP in CPEC or make any other arrangement with one of the Chinese Companies for establishing the project at Gwadar. As a first step we would request allocation of atleast 500 Acrea of land at Gwadar for this important project.
Chinese Petrochemical companies are deploying in Gwadar for their obvious vision of utilizing huge reserves of Minerals & Natural Gas lying un-utilized in their biggest autonomous region of Xinjiang bordering Gwadar, Pakistan and Central Asian countries. The fears are that if this facility is established by Chinese Companies, it will be a big win for them alone by value-adding on their feed-stock available in abundance in Xinjiang region. A joint venture with China may be another choice, but it has to be negotiated at GoP level. This will ensure need based designing of the CNCP project catering the needs of Pakistani market and our feed-stock. Gwadar, being a deep sea port is the best candidate for CNCP project.
Considering above, we would request that this project of such strategic importance may kindly be taken up at GoP level at priority. Pakistan Chemical Manufacturers Association as a facilitator bodyand its member companies in their capacities would be willing to house/ own and also contribute in realizing this crucially important project for Pakistan.
The writer is secretary general/COO at PCMA.