Proposed CNCP to save Pakistan billions on chemical imports

LAHORE: The establishment of a crude-naphtha cracker petrochemical (CNCP) plant will give rise to a strong downstream chemical industry by producing hundreds of high-value chemicals locally, resulting in an import substitution worth of around $2-3 billion in the first year, a statement said on Monday.

“Global chemical industry is a $4 trillion enterprise that impacts nearly every sector of the economy,” Mian Muhammad Adrees, chairman Pakistan Chemical Manufacturers Association (PCMA), said in a proposal taken up with Prime Minister of Pakistan.

The chemical businesses have prime significance 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, downstream industry is dependent on imports, whereas India established its first cracker in 1992 and currently has 8 units, Iran despite the sanctions has been able to put in place seven, Singapore owns five huge-capacity state-of-the-art facilities, while Saudi Arabia owns twelve crackers.

“A key pre-requisite for any chemical industry is petrochemical-naphtha cracker complex. On top of bolstering downstream chemical industry, cutting down chemical imports, it will also create around 50,000-60,000 additional jobs within 3-5 years of its operationalisation,” Adress observed.

Pakistan’s chemical imports constitute around 17 percent of the total import bill. The country has made considerable progress in basic inorganic chemicals like soda ash, caustic soda, sulphuric acid, and chlorine with sufficient production capacity, but the lack of the availability of other chemicals including petrochemicals leads to dependence on imports. The chemical imports in 2015 amounted to over $5-6 billion and each year there is an average increase of 5-8 percent.

“Owing to its high cost, around $3-5 billion, the members of the PCMA cannot take on this project on their own; however, being a crucial project of strategic importance for Pakistan, the CNCP offers unlimited opportunities of investment in extremely viable businesses mostly in small and medium sized enterprises (SME) sector,” the PCMA chief said.

Adrees added that, therefore, the PCMA has appealed to the government to establish the project in public sector like it has been done in India and China.

“The PCMA, during a visit of its 15-member delegation to China last year had developed good working relations with the key chemical companies in China,” he said adding the Chinese engineering construction giant, TCC China, for example, is not only aware of the fact that Pakistan direly needs a CNCP project, but is also willing to built it. 

Moving forward, the PCMA head suggested that the project can also be undertaken as a part of China-Pakistan Economic Corridor (CPEC) by just allocating at least 500 acres of land in Gwadar, as a first step for this important project.

Adrees said the PCMA has suggested the government to negotiate a joint venture with China so as to ensure need based designing of the CNCP project at Gwadar, which being a deep sea port, is the best candidate for CNCP project.

“The PCMA is ready to extend all possible cooperation to contribute, execute and run this crucially important project for Pakistan along with the government,” the chemical industry leader said concluding the statement.