Transforming the petrochemical industry

Chairman and CEO of Carbon Holdings, Basil El-Baz tells us why the powerhouse company is hailed as the definition of resilience

To say that El-Baz is a prominent figure in the industrial sector of Egypt is an understatement. The petrochemical tycoon's organisation, Carbon Holdings, is leading the industry with the launch of its new project, Tahrir Petrochemicals Corporation (TPC), being highly anticipated. 
"Tahrir was the project I wanted to begin with, however, it was too large as an initial endeavour back then, with the total project's cost today being $10.8 billion. We are currently finalising the financing, and are expected to begin construction within the second quarter of 2018. This is an ambitious project, which will produce a slate of basic commodities, including 114 different grades of polymer that are crucial to the further industrialisation of Egypt," he says.
The project is expected to help double Egypt's exports within one year of coming online after a five-year construction period.
For El-Baz, industrialisation was a natural calling and he began to conceptualise his ideas while an undergraduate. "I was in the U.S. at a time when the entrepreneurial fever was at its height between 1993 and 1997. I was studying government and economics with a focus on industrial economics. The consequence of my extensive research on various economies and industrial policies of countries was a realisation that the developing world needs intermediate petrochemical products. You cannot industrialise without a manufacturing sector and you cannot have a manufacturing sector if you are not producing raw materials," he adds.
According to the entrepreneur, it was imperative to reflect upon these factors at a time when innovative thinking was encouraged. "My view is that if the model is sound and based on producing products that the country needs, it will have longevity. Being an Egyptian and having had the opportunity to study at Harvard, my opinion was, if I don't go back, what's the point? It took me eight years to reach financial closure for the first project, Egypt Basic Industries Corporation (EBIC), an ammonia plant. Following the successful start-up of EBIC, it was acquired by a company owned by one of the shareholders. That's really the genesis of Carbon Holdings, after which I spearheaded a project called Egypt Hydrocarbon Corporation (EHC) which uses the raw material I was making at the first facility and makes another product called low-density ammonium nitrate that is used by the mining sector and will increase exports from Egypt. 
"We had been working extremely hard on closing the financing for EHC by January 31, 2011, but on January 25, Egypt went through a revolution. Given the uncertainty, you would have thought this project would have been shut down, but the project was fundamentally sound and so I was able to convince the banks and shareholders to commit to it. In July 2011, we closed and started construction of the facility, becoming the first project to close post-revolution and the largest investor in Egypt post-revolution."
Whilst construction of EHC was underway, a neighbouring facility, Oriental Petrochemicals Company (OPC), was going through a challenging period. "When the revolution happened, OPC shut down and it was clear that it needed to adapt to the new environment, but with 147 shareholders this proved impossible to achieve. I saw this as an outstanding opportunity for Carbon Holdings and so we acquired OPC.
"The key in the petrochemicals business is to have a low cost of delivery. You can have the lowest cost of production globally yet not sell your product, as by the time freight is included in the price it can become too expensive and uncompetitive. Through optimising feedstock supply and the geographical location of Carbon Holdings' projects in Egypt, we are consistently able to compete with Arabian Gulf petrochemical producers because we have a lower cost of delivery to our customers," says Basil.
"One of the things I always say is nobody, globally, has crisis management experience like us," he concludes.

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