Tough start to ambitious plan

13 September 2012

Carbon Holdings plans to revamp Egypt’s petrochemicals sector

Egyptian private petrochemicals firm Carbon Holdings has ambitious plans to revamp the country’s underperforming petrochemicals and fertilisers sector by investing in four major schemes worth more than $7bn.

Two are moving forward as scheduled. The first, Egypt Basic Industries Corporation (EBIC), which was developed by Carbon Holdings along with state-owned Egas and Zurich-headquartered Transammonia, has been operating since 2009. The acquisition of two other plants are expected to close by the end of the year.

However, two other schemes are facing difficulties. The planned Tahrir Petrochemicals complex was scheduled to start up in late 2016. This date has now been pushed back as Carbon Holdings has been forced to sign a new lead engineering, procurement and construction (EPC) contract with Germany’s Linde.

The Tahrir Petrochemicals complex was scheduled to start up in 2016. This has now been pushed back

The previous contractor, US engineering firm, Shaw Energy & Chemicals, is now part of France’s Technip. Carbon Holdings alleges that it had no intention of committing to the project. It is now demanding more than $400m in damages in a US court. Replacing the lead contractor is always going to be difficult. In the case of Carbon Holdings, it will push its plans back by a full year.

It is also awaiting the final approval of $2.6bn worth of loans from the US and South Korean export credit agencies to finance the $3.75bn scheme.

There are also ongoing issues relating to another firm’s schemes, a major new methanol and ammonia facility at Suez with Japanese partners. The project has been effectively on hold awaiting a decision on gas feedstock. This now rests with the new petroleum minister, Osama Kamal. If signed, the plant could be completed within three years.

The delays will mark a difficult start to Carbon Holdings’ plans to invest in Egypt’s petrochemicals and fertiliser sectors.

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