ICI Pakistan Ltd.

MIGA issued coverage to Imperial Chemical Industries, Plc. (ICI) of the United Kingdom for its $22.9 million equity investment in the expansion of the Sheikhupura Polyester Plant (SPP), a unit of ICI's branch operations in Pakistan. (ICI will make the investment through its wholly owned Netherlands branch, ICI Omicron, B.V.) MIGA's $9 million guarantee will cover ICI the risks of currency transfer, expropriation, and war and civil disturbance. Several foreign and domestic lenders and investors are involved in the project financing.

SPP was established in 1982 to manufacture polyester fiber in Pakistan. It represents one-third of the assets of ICI Pakistan Limited, one of the largest multinationals in Pakistan, and isa joint venture among ICI and Pakistani nationals and institutional investors as well as foreign institutional investors.

The expansion involves construction of a new manufacturing facility and a spinning and processing facility, expected to increase production of polyester fiber by 63,000 tons annually and processing by 31,500 tons annually. The new plant will use continuous polymerization technology supplied by DuPont, which will boost energy saving and enhance product quality. The new investment also forms part of the capital for increasing the capacity of the on-site captive power plant from 10 to 14 megawatts.

The project is expected to have an important economic impact, since the textile industry accounts for almost 50 percent of Pakistan's exports and is a major contributor to the economy. The polyester fiber sector is an integral part of this industry because the increasing demand for blended fabrics has created a fast-growing market for high-quality polyester fiber.

The expansion will create about 140 technical and professional jobs for Pakistani nationals and provide an extensive training program in the use of the new technology. Most of the raw materials and quipment will be sourced locally, and local businesses in the packaging, transport, and utilities sectors that will serve the expanded plant will also benefit. Other downstream businesses that recycle polyester fiber waste to manufacture related products will benefit from the expansion as well. By providing the textile industry with a domestic substitute for imports, SPP's expansion also will help save foreign exchange.