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Indigenisation of fertiliser machinery and equipment
By Engr Hussain Ahmad Siddiqui

Pakistan fertiliser industry is well established and based on advanced technology with an investment of Rs87 billion, providing employment to about 7,600 persons.

Of the 10 units in operation, eight in private sector including those privatised recently and two in public sector that too are in advanced stage of divestment.

The sector has an annual installed capacity of 5,753,000 tons of a wide variety of fertilisers. These include urea, nitrogenous phosphoric potassium (NPK), single super phosphate (SSP), triple super phosphate (TSP), nitrogen phosphate (NP), calcium ammonium nitrate (CAN), diammonium phosphate (DAP) and others.

In response to the Fertilizer Policy 2001 that extends numerous fiscal and financial benefits to investors, a number of units have carried out major balancing, modernisation, rehabilitation and expansion (BMRE) during the last few years.

Private sector also established an NPK plant at Daharki having achieved commercial production in 2002.

A new project, under the name Fatima Fertilizers, is planned at Sadiqabad for urea production for which natural gas was allocated three years ago. In addition, the ministry of industries, production and special initiatives is currently processing sanction for setting up another urea plant to meet future demand. It is projected that by 2011-12 the country would need additional two million tons of fertiliser for domestic consumption.

However no attention has been paid, either by the government or the fertiliser industry, to promote indigenous technical capabilities to support the fast expanding sector with a future outlook. The existing plants have been established with the help foreign supplier of plants. In-house mechanical facilities, though limited, were created by a couple of companies basically for installation and erection purposes, which are now being utilised for plant maintenance.

Fertiliser plants are essentially required to be highly efficient, well balanced and equipped with precision process controls. For this reason, projects are largely engineering-intensive. Typically, hardware or plant machinery constitutes half of the capital cost of a standard project.

Of this, 50 per cent is the cost of process equipment like vessels, columns and heat exchangers, whereas mechanical auxiliaries and ancillaries, such as compressors, pumps, valves and piping contribute 15 per cent towards this cost. The remaining 35 per cent cost is that of instrumentation, electrical equipment, dryers, filters and miscellaneous steel structures.

Plant machinery for a standard fertiliser plant consists of a variety of pressure vessels, heat exchangers, reactors, absorption towers, regeneration towers, converters, furnaces, power equipment, conveying equipment, rotary equipment, electrical equipment, controls, drum dryers, vacuum dryers, cyclone scrubbers and separators etc.

Most of these items can be manufactured indigenously, without making additional investment. However, balancing of existing machinery and other facilities will be required for undertaking manufacturing of a few critical items. Standard and proprietary equipment like compressors, pumps, bagging machines and special material components will continue to be imported.

Indeed a reasonable engineering and manufacturing base for the design, production and supply of machinery and equipment for chemical and fertiliser plants exist in the country.

The engineering industry, in public and private sector, is in position to achieve indigenisation level to the extent of 30-35 per cent by value and much higher by weight, for producing machinery for various types of fertilisers. These units, notably Heavy Mechanical Complex, DESCON Engineering, Karachi Shipyard & Engineering Works, HMC-3 and Siemens (Pakistan) Engineering have the requisite resources and physical facilities to deliver mechanical and electrical equipment, at competitive rates and of international quality.

ENAR Petrotech specialises in design, engineering and supervision of process plants. Pooling up all these engineering and manufacturing resources could create nucleus for undertaking supply of major items of mechanical and electrical equipment, in the first phase, and finally, supply and installation of a complete fertiliser plant. There is however the need to acquire necessary state-of-the-art process engineering know-how that can only be provided by a foreign technology partner.

In fact, the local engineering industry has manufactured and installed equipment for fertilizer industry in recent past. Hazara Phosphate Fertilizers Ltd at Haripur, consisting of a 300 ton per day capacity SSP plant and a sulfuric acid plant of 110 ton daily capacity, has been planned, designed and implemented primarily by the local industry.

ENAR Petrotech, in collaboration with its Western technology partners, did design engineering and provided technical services for the project. The engineering industry effectively participated in manufacturing and supply of equipment for sulfuric acid plant, main fertiliser production unit and grinding, granulation, dressing and bagging sections of the factory.

Major equipment was manufactured at Heavy Mechanical Complex (HMC), which included precision equipment like waste heat boiler, economisers, drum den, granulator, dryer, gas exchangers, cyclone scrubbers and separators, heating coils etc. Other items of equipment were fabricated by SEFEC, Ravi Engineering and IFC.

The SSP plant was commissioned in 1987-88 at a total cost of nearly Rs300 million, with plant machinery having only 30 per cent share of imported equipment. Up to February 2006, the plant has produced cumulatively a total of over one million tons of granular SSP.

At a small scale, the HMC has supplied, over a period of time, various equipment, components and spare parts for other fertilizer plants, such as Pak-Arab Fertilizer, Pak-Saudi Fertilizer, Pak-China Fertilizer and the FFC. These items include low-pressure steam saturator, pre-heater, air heater, inter-stage cooler, make-up gas chiller, gas separator, CO2 absorber for urea plant, reformer stack for ammonia plant, storage tanks, vessels and steel structures.

Likewise, DESCON has executed a number of contracts in Pakistan and the Middle East for rehabilitation, overhauling and maintenance of fertiliser and other process plants. The list of locally manufactured machinery and equipment, as notified periodically by the Central Board of Revenue under Custom General Order (CGO), covers equipment for fertiliser plant.

Also, raw materials, components and proprietary items required for the manufacturing and assembly of fertiliser plant machinery are importable duty free by the capital goods industry, vide SRO 565(I)/2006.

Thus there is an urgent need to optimise indigenisation for plant machinery required for fertiliser industry. The government priorities somehow seem to be misplaced, since there is nothing concrete being done to strengthen and promote domestic capital goods industry.

On the contrary, concessionary or duty-free import of plant machinery, for fertilizer sector for example, is openly allowed. The long-awaited policy has not yet been announced despite a lapse of almost six years of its draft preparation.

Similar is the case with the SME policy that is pending for finalisation and approval since long. All thrust of the government seems to be on developing real estate and promoting consumer industry.

In order to focus on optimal indigenisation in the fertilizer sector, the government should make it mandatory on the part of the project sponsors to have provision in their engineering, procurement and construction) (EPC) contracts with foreign suppliers to avail design and manufacturing facilities locally, under transfer of requisite technology.

Our engineering industry is ready to present its credentials at international level in many areas including machinery and equipment for chemical and fertilizer plants, given due support both by the government and the investors. The statement is supported by the fact that Pakistan Engineering Complex of the PIA currently manufactures precision aviation parts for Boeing, Airbus and General Electric (GE).

Courtesy: The DAWN;

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