SINGAPORE, August 31 /PRNewswire/ --     ICIS news has exclusively revealed that Pakistan's sole polyvinyl
chloride (PVC) producer Engro Asahi Polymer and Chemicals, after securing
loans of $150m, is finalising an ambitious project that will see the
expansion of its PVC plant and the construction of a chlor-alkali complex
adjacent to it, a company executive said on Friday.

The remaining $71m for the $221m project is being financed through equity
infusion, chief financial officer (CFO) Arshad Ahmed told ICIS news in an
interview, adding the company also planned to list on the Pakistan stock
exchange.

"Per capita consumption of PVC per year in Pakistan is a mere 0.6kg, far
lower than India's 1.16kg, China's 6.8kg and Thailand's 8.43kg and the Middle
East's 5.25kg. This shows the growth potential that exists in Pakistan" he
said.

"IFC [International Finance Corp] will be injecting $20m equity into the
company. Engro Chemicals, Pakistan and Mitsubishi Corp will pump in $25m and
$3.5m to increase their equity in the joint venture," he added.

Engro Asahi's 100,000 tonne/year PVC plant, located in Port Qasim, near
the coastal city of Karachi, would be expanded by 50% to 150,000 tonnes/year
in the third quarter of 2008, he said.

A 150,000-200,000 tonne/year vinyl chloride monomer (VCM) plant, a
200,000 tonne/year ethylene dichloride (EDC) plant and a 100,000 tonne/year
caustic soda plant were expected to start up in the first half of 2009, he
added.

A 55 megawatt power plant would also be set up to provide captive
electricity to the complex, he said, adding ethylene feedstock for the VCM
and EDC plants would be sourced from the Middle East through contract
agreements.

"We will also have the option to debottleneck the PVC capacity to 200,000
tonnes/year at a later stage depending on market conditions," he added.

Any excess capacity after catering to the domestic market would be
diverted to other Asian markets, he said.

"Demand for pipe-grade PVC is projected to grow by 10-12% in 2007,
especially in the construction and water supply segments," he said.

However, other grades like wire and cable and window profiles were
expected to be introduced into the company's portfolio in the near future,
Ahmed said.

Pakistan's consumption of PVC resin in 2006 was estimated to be 100,000
tonnes, with close to 15% of the total demand being met by recycled material
and imports.

Engro Asahi supplied the domestic market with 85,000 tonnes last year and
expected to increase that volume to 100,000 tonnes this year, Ahmed said.

Engro Chemicals and Mitsubishi Corp currently have 80% and 20% equity
respectively in Engro Asahi, following Engro Chemicals' buyout of a 30% stake
from Asahi Glass earlier this year.

The main reason for Asahi Glass's divestment was based on its strategic
decision to curtail its focus on chloro-vinyl businesses outside Japan, the
CFO said.

For the expansion project, Engro Asahi secured its loans of $60m from the
IFC and $90m from local banks.

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