Belt & Road

Belt and Road 2018: Egypt petrochemicals

FinanceAsia examines what China’s Belt and Road initiative has actually brought to the world last year. This is the second of our 10-part series.

China’s trillion-dollar Belt and Road Initiative is hailed as the “project of the century” as the world’s second-largest economy looks to take the lead role in globalisation historically held by the West.

Much has been discussed about the political, economic and cultural impact that the initiative could have globally since it was introduced in 2013. However, there has been little attention paid to the infrastructure projects in the making.

FinanceAsia will publish a series about the 10 biggest Belt and Road infrastructure deals that have been signed in the 2018 calendar year, and examines which companies are spearheading and likely benefitting from these projects.

The series follows a similar feature in 2017 where we examined BRI projects that started that year. Click here to revisit the feature.

These projects will be published in descending order based on their estimated project value. We will only include infrastructure deals of more than $1 billion.

        2. Tahrir Petrochemical Complex, Egypt

Companies involved: China National Chemical Engineering, Carbon Holdings (Egypt)

Status: Memorandum of Understanding signed in July 2018

Estimated project value: $10.9 billion

China is set be involved in the construction of what is set to be Africa’s largest petrochemical project after state-owned China National Chemical Engineering signed a memorandum of understanding with Egypt’s Carbon Holdings in July to jointly develop the Tahrir petrochemical complex.

With an estimated investment of $10.9 billion, the complex is designed to produce 1.35 million tons of polyethylene, 880,000 tons of polypropylene, 250,000 tons of butadiene, 350,000 tons of benzene, 150,000 tons of gasoline and 100,000 tons of 1-hexene every year.

It will also feature a naphtha cracker plant with total capacity of 4 million tons per annum, which will make it the largest of its kind in the world.

The Tahrir petrochemical complex is to be built on the northern outskirts of Ain Sokhna, an Egyptian town located at the southern entrance of the Suez Canal and approximately 120 kilometres east of Cairo.

Industry experts estimate the complex will create some 50,000 jobs and increase Egypt’s exports by 25%. Basil El-Baz, chairman of Carbon Holdings, predicted the complex could even double Egypt’s exports after one year of operation.

However, it is unclear how much China will be involved in the process since Carbon Holdings has already sealed multiple construction contracts and financing agreements with foreign companies.

It is worth noting that South Korea will play a major role in the project.

The Export-Import Bank of Korea and the Korean Insurance Corporation are among the major financing agencies for the project alongside Export-Import Bank of the United States, Italian Export Credit Agency and Africa Finance Corporation. Korean infrastructure builder SK E&C is the main contractor on the polyethylene plant.

Construction is expected to begin early this year.

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