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| Deena Kamel |
Egypt’s Carbon Holdings signed a contract with the Suez Canal Authority on Saturday to build the $10.9 billion Tahrir petrochemicals project, producing raw materials needed by the country’s industrial sector.
The five million-square metre project, to be located at Suez Canal Economic Zone in Ain Sokhna, is set to become the biggest petrochemicals complex in the Middle East, according to the Egyptian Cabinet. It is expected to create 48,000 jobs.
“The project is funded by international institutions to comply with the petrochemicals strategy and represents an added value to the Egyptian industrial sector,” the Cabinet said in a statement.
Egypt is embarking on new mega-projects to attract investors. The 460-square kilometre economic zone around the Suez Canal, a major source of foreign currency, is designed to transform Egypt into a regional logistics hub.
Sourcing funding for the long-delayed Tahrir project is a positive step, Robin Mills, chief executive of Qamar Energy in Dubai, told The National.
“They’ve finally got the financing together, which will have a positive impact for investments,” Mr Mills said. “The project will boost Egypt’s petrochemicals exports and, when available locally, make it cheaper than when it was imported.”
Construction on the project must begin quickly as Egypt urgently requires the products of the petrochemicals facility, said Mohab Memesh, chief executive of the Suez Canal Authority and economic zone.
While economic growth has slowed in the north African import-dependent country since the 2011 uprising drove away tourists and foreign investors, recent reforms tied to a $12 billion IMF loan are aimed at reviving growth alongside major projects such as Tahrir.
“Structural reforms are critical for the success of the programme," the IMF Managing Director Christine Lagarde said at the weekend after the fund agreed to release the latest tranche of the loan.
"The aim is to address deep-seated structural impediments to growth and job creation, and create an enabling environment for private sector development," she said.
The Tahrir project will take around three and a half years to build and will comprise 11 plants, said Basil El Baz, chief executive of Carbon Holdings.
The scheme will help Egypt to double its exports within one year of coming online, Reuters reported, citing Mr El Baz. Tahrir will have to export all its production in the first year but as output increases, local manufacturers will be encouraged to expand and foreign ones will consider setting up next to the Suez Canal.
Exporting petrochemicals from Egypt to markets such as Europe and Asia will be highly competitive, Mr Mills said.
“Europe is already a declining market and Asia is a big market that everyone is targeting but Egypt will be competing with Sabic and Adnoc, so it’s a competitive market,” he said. “The challenge is to find a market that it is competitive in.”
When completed, the scheme will be Egypt’s first naptha cracker, producing various petrochemicals used in making different industrial and consumer products.
The Cairo-based closely-held Carbon Holdings, established in 2008, already has a polypropylene plant and a mining grade ammonium nitrate plant.
The company is planning to raise up to $250 million from a dual listing on the Egyptian stock exchange and the London stock exchange by the end of the first half of 2019, according to a report by Egyptian newspaper Al Masry Al Youm. The ultimate size of the listing is yet to be decided.
Egypt’s project is the latest in the region’s petrochemicals sector which has already seen recent announcements by Abu Dhabi and Saudi Arabia.
State-owned Abu Dhabi National Oil Company (Adnoc) and Saudi Aramco signed an agreement last week to jointly invest in a $44bn refinery on the west coast of India, the companies said on Monday.
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