Karachi (September 14, 2018): Pakistan’s chemicals-to-energy conglomerate Engro Corporation has seen its fortunes rise on the back of massive Chinese investment, but plans to shape its future growth around the country’s vast population and expanding middle class.
Engro Corp, best known for its fertilizer and petrochemicals factories, as well as engineering projects, is Pakistan’s largest listed conglomerate, and after recovering from a brush with bankruptcy in the early part of this decade is now sitting on a $500 million cash pile.
It has been a major beneficiary from Beijing’s Belt and Road Initiative splurge, working with Chinese firms on coal and power projects worth billions of dollars.
Engro’s rising fortunes since 2012, when its factories were crippled by gas shortages, mirror the improvements in Pakistan, a nuclear-armed nation where economic growth has accelerated due to vast Chinese investment and a sharp drop in militancy and power outages.
In the near term, Engro’s outlook is linked to a mile-long $1.5 billion coal mine in the Thar desert near the border with India, part of Beijing’s pledge to invest about $60 billion in Pakistan.
But with Pakistan’s new government hinting it may review Belt and Road contracts due to concerns they were too expensive, some analysts see risks on the horizon for Engro and say planned power plants around the mine may struggle to obtain financing.
Ghias Khan, Engro’s chief executive, said that this week he was pretty confident, that government would not re-open deals with sovereign guarantees. If they do, that will have a very negative impact.
This year Pakistan’s economy has also been shaken by a shortage of dollars, and speculation Islamabad may turn to the International Monetary Fund to ease current account pressures.
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