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Chemical industry in Pakistan.


Pakistan had a small basic chemical industry in 1947. By the middle of 1955, there were 4 units for the production of sulphuric acid considered to be an index of industrial activity. One unit at Lyallpur used its output within its plant for further processing. About 3300 tons were available to the market from three plants at Karachi, Sukkur and Rawalpindi. In the First Five Year Plan, a sum of Rs. 2.5 million was provided for the establishment of one plant with annual production capacity of 3,000 tons. Additional Rs. 200,000 were provided for the modernisation of existing plants.

The production capacity for soda ash was 20,000 tons a year at Khewra in the Punjab. Actual annual output was about 24,000 tons. There was one plant for the production of 3,000 tons of caustic soda at Nowshera in NWFP. Production of this unit was used within the plant for the production of card-board. Annual imports were 8 to 9,000 tons for soap and other industries. Since then there has been sizeable investment in the chemical industry and annual production has been increasing fast as given below:- [Tabular Data Omitted]

Heavy Chemicals

Heavy chemicals that sell at low prices, relative to their weight and bulk, constitute the major portion of chemical products, Although these are quite diverse yet these have some common characteristics, in addition to those given above. They turn out their products in thousands of tons instead of pounds. The raw materials, salt, air, surplus, lime etc., are plentiful and easily available and value added by manufacture is not high. Production of heavy alkali industries like soda ash and caustic soda, for instance showed phenomenal growth since the early 1960's yet these products were produced in insufficient quantities and were barely adequate to satisfy the burgeoning demand of these products. During the Second Five Year Plan 1960-65, a Soda Ash plant was set up near Karachi and a Caustic Soda Plant, using the electrolytic process was established near Lahore, while a capacity of about 20,000 tons per annum. Chlorine available as a by-product from electrolytic caustic soda plant, was to be used to make hydro-chloric acid, liquid chlorine, bleaching powder, polyvinyl-chloride DDT and similar other products.

The basic chemical industry was taken over by the Government in January 1972 under Economic Reform Order 1972. The Government established Federal Chemical and Ceramics Corporation Limited (FCCCL) on August 13, 1973 to develop the chemical industry on national basis and to set up new projects for making the country self-sufficient in as many basic chemicals as practicable.

Import of Chemicals

Import of chemicals has grown fast in the last nine years. Imports were Rs. 5,307.0 million in 1981-82. They increased to Rs. 25,287.3 million in 1989-90 showing a five fold increase in the nine years. Average annual import of chemicals in the last nine years was Rs. 12.220 billion. Annual growth rate of imports for the last nine years worked out to 19.6 per cent per annum.
Imports of Chemicals
 Imports of
 Chemicals % share of
 and related Total Chemical
 products Imports in Total
Years (Rs. million) (Rs. Million) Imports
1981-82 5,307.0 59,481.5 8.9
1982-83 7,508.2 68,150.8 11.0
1983-84 8,538.2 72,706.7 11.1
1984-85 10,049.5 89,778.2 11.1
1985-86 11,663.2 90,946.3 12.8
1986-87 15,773.7 92,430.8 17.0
1987-88 17,612.5 112,550.9 15.6
1988-89 21,317.6 135,840.5 15.6
1989-90 25,287.3 148,853.3 16.9
Source: State Bank Annual Report 1989-90

It will be see from the above table that as a percentage of total imports chemicals and related products have shown a marked increase in the last nine years. It was 8.9 per cent in 1981-82 and shot up to 17.0 per cent in 1986-87. However, it was maintained at 15.6 per cent in 1987-88 and 1988-89 and slightly increased to 16.9 per cent in 1989-90. Surely there is something wrong somewhere in the chemical sector. For instance, from urea exporting country, Pakistan has suddenly become an importing country in 1985-86. Imports of chemical fertilizer shot up from 314,000 tonnes in 1981-82 worth $ 84.60 million to 1,127,500 tonnes worth $ 206.9 million in 198-90.

The situation of shortage has been created due to the fact that over the past years no new sanctions have come for fertilizer plants although the demand was growing fast. While long term planning for adequate new capacity was neglected, the short run solutions to increase domestic production have also been ignore. For instance urea production could be increased by debottlenecking of the existing units. With this device the urea production could be enhanced by 10 to 15 per cent to meet the demand explosion. There is also the erroneous criteria for determining the demand. According to the experts, the criteria to work out the demand should be based on planted area, cropping pattern and realistic ratio of consumption between the three nutrients i.e. the nitrogenous, phosphatic and potassic fertilizer. Contrary to this planners in Pakistan use historical data of consumption adding to it a certain percentage of growth anticipated for the coming year. By doing this, we go from one crisis to the next.

It will be seen from the table-III that chemicals including medicinal and pharmaceutical product recorded approximately threefold increase in imports in the last seven years. Chemicals including organic and inorganic chemicals, chemical materials and other products and other chemicals totalled Rs. 13.047 billion in 1989-90 as compared to Rs. 3.423 billion in 1982-83. Annual growth of chemicals and allied products is given in the Table-IV. Average annual growth of imports worked out to 19.0 per cent in the last seven years. [Tabular Data Omitted]
Imports of Chemicals
Year Imports & Increase
1982-83 7,508.2 -
1983-84 8,538.2 13.71
1984-85 10,049.5 17.70
1985-86 11,663.2 16.05
1986-87 15,773.1 35.23
1987-88 17,612.5 11.66
1988-89 21,317.6 21.03
1989-90 25,287.3 18.62
Annual average growth rate 19.0
Source: State Bank Annual Report


Pakistan has been exporting chemicals to foreign countries. Details of exports are given in the following table. State Bank of Pakistan has listed the following chemicals in the export list.

All kinds of chemicals are exported from Pakistan to various countries including UK, Bangladesh, Sri Lanka, Malaysia and UAE-Dubai. Main importer of chemicals cal1989-90 was UK. [Tabular Data Omitted]
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Publication:Economic Review
Date:Oct 1, 1991
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