IFC pledges $35mln Ijarah financing for Engro project

KARACHI: The International Finance Corporation (IFC), a member of the World Bank Group, has agreed to extend shariah-based loan of $35 million to Engro Polymer and Chemicals to support its expansion project.

“Engro Polymer and Chemicals Limited has entered into agreements for availing a long-term Ijarah-based financing facility of up to $35 million with the International Finance Corporation (IFC) for, inter alia, partially funding the company’s PVC (polyvinyl chloride) expansion project,” Engro Polymer said in a statement to the Pakistan Stock Exchange.

“It is also intimated that in light of such arrangement, the anticipated financing requirements for the expansion project announced on December 28, 2017 have been met.”

Engro Polymer and Chemicals last year announced a contract agreement with Tianchen Corp China for an integrated manufacturing facility with an annual production capacity of 100,000 tons. The financing package, structured as an Ijarah Islamic finance facility, will help the company increase efficiency and increase the production of polyvinyl chloride, in particular, and caustic soda flakes.

“This will help boost growing downstream sectors such as construction, housing, consumer goods, and agriculture, which will also increase business for local suppliers,” IFC said in a separate statement.

“This investment will also help the development of associated local industries, creating new job opportunities while the expected efficiency improvements will result in decreased carbon dioxide emissions.”

Imran Anwer, chief executive officer of Engro Polymer said IFC’s investment will help us continue to innovate and increase production of sophisticated chemicals like PVC, which have a high multiplier effect on other sectors in addition to saving precious foreign exchange for the country. “It will also help us in our aim to become more resource- and energy-efficient, which will ultimately make us more competitive, both in Pakistan and beyond,” Anwer said.

Engro Polymer is a part of Engro Corporation whose diverse portfolio includes operations in fertilisers, foods, chemical storage and handling, trading, energy and petrochemicals.

IFC has been investing in various Engro group businesses since the early 1990s.

“Engro Polymer’s success highlights the potential of the private sector to build capacity and transform industries through the adoption of better technology and standards,” said Nena Stoiljkovic, IFC Vice President, Asia and Pacific.

“This investment will send a strong market signal on the positive outlook for the chemical sector, while also showcasing Pakistan's promise to mitigate climate change.”

The financing is part of IFC’s broader strategy in Pakistan to support local producers, drive inclusive growth, and create jobs. As of fiscal year 2018, IFC’s total commitments in the country stood at around $1.195 billion.

IFC’s work is part of the World Bank Group’s country partnership strategy for Pakistan, which aims to support private sector development in sectors with the potential for a high multiplier effect, leading to economy-wide productivity gains, job creation, and poverty reduction.