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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 |
Pakissan.com;
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