EPCL Expansion

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Engro Polymers and Chemicals Limited (“EPCL” or the “company”), is the only fully integrated chlor-vinyl chemical complex in Pakistan. The company is involved in the manufacture, marketing and distribution of poly-vinyl chloride (PVC) and selling of chlor-vinyl allied products including Vinyl Chloride Monomer (VCM), Caustic Soda (NaOH), Hydrochloric Acid (HCl), Sodium Hypochlorite (NaOCl) and Hydrogen (H2). EPCL is part of Engro group and a former IFC client under good standing for backward integration project to increase production capacity under Phase-II (ID #25582) and capacity expansion under Phase-III (ID#41160). IFC has known Engro group since the early 1990s and has since invested across a number of its group companies including Elengy Terminal Pakistan, Engro Elengy Terminal, Engro Energy being the existing IFC clients.  With multiple rounds of expansion, debottlenecking and backward integration EPCL currently has the capacity to produce annually: 195,000 tons of PVC; 127,000 tons of ethylene dichloride (EDC) (raw material for VCM); 204,000 tons of VCM (raw material for PVC); 106,000 tons of caustic soda; 60,000 tons of hydrochloric acid; 30,000 tons of sodium hypochlorite; and 3,000 tons of hydrogen. The EPCL has capacity to store 3,300 tons of VCM and 2,000 tons of dry EDC. The company initiated implementing an expansion project in 2018, viz. Engro Polymer Phase-III with funding from IFC (project #41160 https://iportal.ifc.org/pages/projectcycle.aspx?projectid=41160 ), which includes: -          PVC expansion by 100,000 tpa; -          de-bottlenecking of VCM Plant to increase capacity by 50,000 tpa; -          establishment of Caustic Soda Flakes Conversion Plant, a higher margin product; -          membrane replacement of caustic soda plant to maintain production and reduce gas consumption by 1 MMBTU/ton (4.3% of total consumption); and -          upgradation of Gas Turbine to reduce gas consumption by 0.4 MMBTU/ton (2.6% of total consumption). Phase-III expansion project is targeted to complete by March 2021. This phase III expansion did not require any expansion in the utilities as the project demand for steam, cooling water, chiller water, demineralized water, power and effluent treatment will be adequately met with the existing infrastructure within the capacity of existing utilities. The project will be installed within EPCL’s existing facility and the adjacent land acquired from the parent company within the Port Qasim industrial Area. As a follow-on to expansion under Phase-III, EPCL is now pursuing an optimization plan, (the “project”), to including: (i)                  implementing Oxy Vent Recycling (OVR) system to reduce manufacturing costs; which will reduce the raw material requirement by 2%, lowering the atmospheric release of ethylene di-chloride (EDC) by 6 kg/ton of VCM.(ii)               introduce Hydrogen Peroxide (H2O2) to its product suite by becoming the first producer in the south of the Country; and (iii)             Working capital. EPCL’s manufacturing facility spans over 68 acres and is located in the Eastern Zone of the 4500 hectares industry park, managed by Port Qasim Authority (PQA), approximately 30 km east of Karachi, Pakistan. The project will be set up inside the EPCL’s existing fence line and on additional land adjacent to its existing site owned by Engro Chemicals Pakistan Ltd.  The PQA industry park was set up in early 1970s and there is no residential community inside the industry park. The nearest community to EPCL is approximately six km away. There are mangroves and mud flats to the south of the PQA industry park. According to the Environmental Impact Assessment (EIA) of the previous expansion project, there are abundant flora/fauna communities associated with the mangrove forest. The Eastern Zone of Port Qasim is distant from the mangrove forests and no direct impacts on biodiversity are anticipated from the expansion project. The project is planned to achieve commissioning in around two years. EPCL has engaged M/S Chematur, a Swedish company, for detailed engineering project whereas engagement of engineering, procurement and construction (EPC) contractor is under bidding process. The proposed IFC investment comprises of a loan of US$15 million and a quasi-equity (QE) investment via preference shares of up to US$20 million.