Interview with Karim Hefzy, Carbon Holdings’ MD of Project Development
How is the Tahrir Petrochemical Complex (TPC) project progressing? When is it expected to come into operation and what will its production capacities be?
As we announced in June last year, Tahrir Petrochemical Complex is a circa US$11bn project that will be financed by debt and equity from investors around the world. Since this announcement, we have been busy on the project site preparing for the start of construction, undertaking tasks such as ensuring that the area is clear, levelling the site, dredging the dedicated port, and completing all the pre-works necessary to start construction. We are excited by this project to build a world-scale naphtha cracker in the Suez Canal Economic Zone (SCZone) and we expect financial close to be at the end of the year with construction to commence shortly thereafter.
At full capacity, the project is expected to produce annually 1.35m tonnes of high-density polyethylene and linear low-density polyethylene. TPC will also produce 1m tonnes of propylene, around 900,000 tonnes of polypropylene, 250,000 tonnes of butadiene and between 350,000-550,000 tonnes of benzene. These products will be used as raw materials in many downstream applications in numerous sectors such as construction, manufacturing, agriculture and delivery to key markets in Sub-Saharan Africa, Asia, and Europe.
In your view, what effect will TPC have on Egypt’s midstream/downstream industry and its impact on Egypt’s exports and economy in general?
TPC will have a tremendous impact on Egypt’s economy in general and in exports specifically. Egypt has not been able to effectively industrialise until now due to the lack of raw materials available in country. Our dream at Carbon Holdings is that ten years after TPC is operational, most of our products will be sold locally to be converted into final products by downstream manufacturers. At Carbon Holdings, we are all excited by what TPC can bring to Egypt’s downstream manufacturing sector and the amount of jobs that it will create for the Egyptian people. Once operational, the project is expected to employ over 2000 skilled engineers and technicians in the SCZone and our products will create many more downstream jobs. In addition to these direct jobs, the project will create tens of thousands of indirect jobs servicing the project and all the downstream facilities.
We believe that the manufacturing sector has a critical role to play in Egypt’s growth through the employment of Egyptians and the export of products to key markets. Carbon Holdings is playing its part in this, and because of TPC’s location in the SCZone, its products can be transported by ship cost-effectively both East and West of Suez. The success of TPC will result in other companies establishing their operations in this strategically important location.
What benefits does being located the Suez Canal Economic Zone provide?
Given Egypt’s Mediterranean Sea and Red Sea coastlines, it has access, via ship, to the global markets without needing to ship through the costly Suez Canal. All of TPC’s solid products can be transported by land to the Mediterranean ports to ship to markets west of Suez. The SCZone, where Oriental Petrochemicals Corporation (OPC) and Egypt Hydrocarbon Corporation (EHC) are currently operational and where TPC will be constructed, gives it a number of strategic advantages.
The SCZone is located close to ports on the Red Sea that enable the efficient transport of our products. The SCZone already has the piping infrastructure and facilities in place to ensure that Carbon Holdings’ plants receive the natural gas and other feedstocks it needs to create its products. From the mouth of the Suez Canal, the SCZone is on a major shipping route giving it access to markets in the Gulf, Africa, and Asia. Additionally, overland transport links from the area allow materials to be shipped to Europe and the Americas from any of the Mediterranean ports in Port Said, Damietta, and Alexandria. As a result, plants in the SCZone and organisations, such as Carbon Holdings, can provide its products to the global markets at highly competitive prices.
Given the rise in manufacturing in Egypt, the SCZone will continue to grow as one of the country’s major industrial hubs. The existing infrastructure and transport links already provide an opportunity for the area to expand, linked by infrastructure to the rest of the economy. As the SCZone grows, the resources it will offer, in terms of employable skills, service industries, expertise and more, will expand and allow companies operating in the area to benefit from the increased economies of scale.
In general, what is your view on the Egyptian petrochemicals industry? What can be done to develop it and improve its productivity, efficiency and competitiveness?
To be globally efficient and competitive in the petrochemicals industry, Egyptian companies need to focus on supply chain management and logistics.
For some time, Egypt’s petrochemicals industry has been on the back foot, due to the Country’s lack of basic industry building blocks. Until recently, producers were importing raw materials and converting them into plastic resin and other petrochemicals in small scale facilities. Now, this is beginning to change, with the likes of Ethydco, SidPec and EPPC starting to produce their own ethylene and propylene.
TPC will continue to strengthen the industry and tackle this problem by producing the basic raw materials required to properly develop a petrochemicals industrial hub. The downstream petrochemicals products that it will produce will be consumed in Egypt’s massive market or exported competitively. By having raw materials “next door”, downstream companies can focus on efficiently manufacturing good quality products, as opposed to putting excessive working capital in transporting and storing raw materials from far away suppliers, making them more competitive and more productive.