28 June 2011 06:45 [Source: ICIS news]
By Tahir Ikram
SINGAPORE (ICIS)--Despite the crippling energy crisis gripping Pakistan, ICI Pakistan remains upbeat about soda ash market prospects and feels there is tremendous potential to be tapped in both local and regional markets, a company executive said on Tuesday.
The company is running its plant in Khewra at 75% capacity because of shortages of natural gas in the country, Ali A Aga, ICI Pakistan's executive director and vice president of its soda ash business, told ICIS by email.
Pakistan is facing an energy crisis with huge gaps between the supply and demand of electricity and natural gas, forcing the government to cut power and natural gas supplies to industrial users.
According to Pakistan government estimates, the country is facing a 5,000MW electricity shortage.
The crisis has crippled optimum production of industries across the board and as soda ash is mainly used in detergents and glass making, its demand has also been soft.
Pakistan’s annual demand of soda ash stands at about 350,000 tonnes with annual demand growth at about 5-6% historically before the energy crisis hit, Aga said.
However, with lower production in the downstream sector, ICI Pakistan has been running its plant at reduced rates and has exported nearly 40,000 tonnes of the material in 2010 to Europe, South Africa and to some countries in Asia including neighbouring India.
Aga thinks there is tremendous potential for soda ash exports from Pakistan as the country has abundant raw materials available locally.
The company is investing in the development of alternate energy solutions including coal-fired boilers, he added.
Aga said Pakistan’s per capita consumption at just 1.8kg compared with China’s at 14kg shows tremendous potential for growth in demand in Pakistan.
“Soda ash moves with gross domestic product (GDP) all over the world and so is the case in Pakistan,” Aga said.
While Asian economies have been growing rapidly, Pakistan’s has been hit hard by energy issues and last year’s devastating floods that submerged one fifth of the land and confined its GDP growth at 2.5%, much less than the official projection of over 4%.
In the country’s financial year that runs from July 2011 to June 2012, Pakistan is hoping that its GDP will grow by over 4%.
The growth of demand for soda ash in Pakistan has remained static because of the country’s economic problems, Aga said, adding that this will change if and when the GDP starts growing rapidly.
When that happens, the company will consider an expansion to meet the growing demand, Aga added, but he declined to give details.
While more than half of soda ash usage is by the glass making industry across the world, the main soda ash buyer in Pakistan is the detergent industry. Only 25% of soda ash is consumed by the glass industry in Pakistan.
ICI Pakistan is part of the Dutch coatings and chemicals group, AkzoNobel.
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