Engro Initiates assessment of Ambitious ‘polypropylene’ Project

April 12, 2021

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In a notice to Pakistan Stock Exchange, Engro Corporation has announced that in order to explore investment opportunities in the petrochemical sector, the Board of Directors has approved the commencement of a study in relation to a polypropylene facility based on propane dehydrogenation.

The Board of Engro Corp has approved $31.4 million, or equivalent in rupee, towards conducting engineering, design and technical studies including front end engineering design.

The notice read “The results when complete are expected to inform the final investment decision in relation to the project which would be based on a conducive policy environment and arranging the right mix of debt and equity partners at such time.”

Analysts believe that this is the most ambitious project ENGRO has ever considered. The total cost of the project is currently estimated between PKR100 to 150 billion. This will be the first of its kind project in Pakistan where the company intends to produce polypropylene through Propane Gas.

Polypropylene (PP) is a thermoplastic produced from a combination of petrochemicals. It is used in a variety of applications including packaging for consumer products, plastic parts for various industries including the automotive industry and textiles.

ENGRO will hire a consultancy firm to carry out the study for the Proposed PDH – PP facility to establish feasibility along with the following broad objectives:
 Assess the projected increase in domestic demand of petrochemicals in the country.
 Maximize value addition and return on investment through:

o Production of Petrochemicals
o Utilize existing Land and infrastructure available
o Proximity to port terminals for feedstock sourcing

The proposed complex shall consist of a Propane De-Hydrogenation Unit (PDH) which utilizes propane as feedstock for conversion into propylene through the DeHydrogenation route. The generated propylene from the PDH unit will be used in a downstream Polypropylene unit for conversion.

Production of Polypropylene through Propane gas is considered one of the most cost-efficient method. It is estimated that Each barrels per day of propane will produce 24 tonnes per year of polymer-grade propylene, which is a feedstock for polypropylene.

Engro Corp has roughly PKR 48 billion in liquid funds which it intends to invest in businesses that have high potential and ROE. The production capacity of the proposed polypropylene facility is still unknown, hence the actual cost cannot be estimated at the moment. However, keeping in view the past funding trend, the project is estimated to be funded through a mix of Debt: Equity ratio of 80:20.