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Hydrocracker project - profile.

Hydrocracker project was originally approved by ECNEC in 1982 as a private sector project. Previously M/s. Foster Wheeler of UK had been engaged by the Planning Commission in order to reestablish least-cost-option of this project vis-a-vis some other refining projects. The consultants submitted a report on "Pakistan Petroleum Products Infrastructure" in 1987 and concluded that this project would be the least-cost-option (i.e. most beneficial) for Pakistan. It was also established that this project would save about US $ 100 million in foreign exchange per year through import - substitution. However, the project remained bogged down on one ground or the other. Procrastination by the previous governments has also resulted in its cost escalation. Had this project been given due importance by the previous governments it would have by now not only fully recovered its cost but would have also resulted in substantial saving in foreign exchange.

Benefiting from the liberal policies of the present government who are making earnest efforts to attract foreign investment under the dynamic leadership of Mr. Mohammad Nawaz Sharif, the Prime Minister of Pakistan, this project has at last received the attention which it duly merited. Engr. Islam Nabi, Minister for Production has made untiring efforts in guiding and streamlining various actions from Crescent Petroleum Company International of Sharjah, who are bringing in investment to the tune of US $ 35 millions. Various multinational institutions like World Bank through its Private Sector Energy Development Fund (PSEDF), Islamic Development Bank and Asian Development Bank, have also assured their active participation.

In order to ascertain the design features and functioning of the latest Hydrocracker project in operation, Engr. Islam Nabi, Minister for Production along with a delegation visited the Plant in UAE. and held detailed discussions. Incidentally that Plant had also been designed by M/s UOP of Chicago who are world leaders in this technology. It was realised that due to the lapse of time, the design of the Karachi Hydrocracker project had become outdated and needed upgradation to bring it in line with the latest technology. Taking personal interest, Engr. Islam Nabi, Minister for Production led a delegation to the consultants M/s. UOP's Head Office at Chicago to resolve various issues in the design configuration. He also visited the Pilot Hydrocracker Project at Chicago. As a result, the consultants (M/s. UOP) agreed to upgrade and improve upon the design of Hydrocracker Project so that it would incorporate the latest know-how and technology of hydrocracking. This decision in regard to the transformation of this project on the basis of state-of-the-art technology has indeed been most invaluable.

In order to mobilise funding for this Project, Minister for Production led a delegation to Islamic Development Bank headquarters Jeddah to invite the participation of Islamic Development Bank. It was thus agreed that Islamic Development Bank would not only assure lease financing of 20 million dollars but would also have an equity share holding in this project.

It is indeed heartening to note that as a consequence of the vastly improved climate of investment in the country, if has now become possible for a joint venture company, the first of its kind under the energy sector in Pakistan, to gain momentum, and reach the bidding stage of an engineering, procurement and construction contract of such a massive project of great national importance at an estimated cost of US $ 400 million (approx.). A pre-bidding conference is now in progress with various prequalified bidders of international repute for an early launching of this project which is expected to get on stream in about three years after the contract award.

Based on the policy directives of the Prime Minister for maximum indigenisation and self-reliance, necessary instructions have been issued by Engr. Islam Nabi, Federal Minister for Production that maximum possible indigenisation will be undertaken in the implementation of this Project. ENAR (a consultancy unit of PERAC) and State Engineering Corporation, which are under the administrative control of the Ministry of Production would play a significant role for this purpose.
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Title Annotation:Special Section: Energy; Pakistan's petroleum industry
Publication:Economic Review
Date:Jun 1, 1993
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