Engro, IFC sign deal to explore growth opportunities in logistics

KARACHI: Engro Corporation, a leading business conglomerate in Pakistan, on Monday signed an agreement with the International Finance Corporation (IFC), a member of the World Bank Group, to explore growth opportunities in the country’s underdeveloped logistics sector.

Under the agreement, Engro would devise integrated solutions for products that require temperature controlled logistics (TCL), such as agricultural produce, medicines, and perishable food commodities amongst others. It would co-develop opportunities with IFC InfraVentures in the temperature controlled logistics industry of the country.

Engro, citing an estimate, said the country loses approximately 35 to 40 percent of its production of fruits, vegetables and dairy products due to poor post-harvest management practices.

“Pakistan’s performance on most logistical indicators, including the quality of trade and transport infrastructure, lags behind many emerging Asian countries,” Ghias Khan, president at Engro Corporation said in a statement. “It is, therefore, evident that our transport supply chain system is not providing the value-added services that have become the hallmark of modern logistics, such as multimodal systems that combine the strengths of different transport modes into one integrated solution.”

Another Engro’s official said the partnership entails technical assistance from IFC in conducting a study in the sector that costs the economy four to six percent of GDP a year due to its inefficiencies.

“The company would finance the study, but currently we're assessing the monetary values involved,” the official told The News.

Engro Corporation and IFC have partnered on a number of key projects in Pakistan in the past. “We are coming together again in a venture where our primary objective is to enhance efficiencies in the supply chain for perishable commodities and pave the way for Pakistan to reduce food losses and improve produce quality,” IFC’s Senior Manager for Infrastructure Wiebke Schloemer said.

IFC had loaned $20 million to set up the country’s first liquefied natural gas (LNG) terminal Engro Elengy Terminal Private Limited. Logistics sector is a new field for Engro, but so were the coal mining, food and LNG re-gasification. “We didn’t have coal mining experience either or in food sector, but now we are handling Thar coal power project and have a thriving food subsidiary,” the official said.

Backed by IFC’s technical expertise, Engro aims to explore and develop an integrated platform aimed at providing warehousing and logistics solutions to several industries, such as agriculture, restaurants and healthcare, which require reliable TCL solution to operate effectively, while focusing on their core business.

Pakistan’s ability to move goods quickly, effectively and reliably across borders will make it more competitive in the global markets with the infrastructure development projects such as China-Pakistan Economic Corridor, a One-Belt-One-Road initiative, and development of rail and road links with adjoining countries.