Lotte seeks increase in import tariffs

‘Company will expand its plant only when the industry is protected’.

SINGAPORE: The fate of Lotte Pakistan PTA’s (Lotte PPTA) investment to expand its purified terephthalic acid (PTA) production capacity to 1.5 million tons per year depends on government’s decision to increase import tariffs to protect the industry, a company executive said.

The company, which has a 500,000-ton per year plant at Port Qasim, is planning to spend up to $500 million on the expansion, Lotte PPTA CEO Asif Saad told ICIS news.

The Board of Investment (BOI) early this year requested the company, the only PTA maker in Pakistan, to submit a proposal to undertake the expansion, according to Saad. “We explained in this proposal that PTA, being a cyclical commodity business, needs a minimal amount of government support in shape of tariff protection.”

“In our view, the [import] tariff for PTA should be set at a minimum of 7.5%. Current import tariff at 3% is not sufficient to protect the PTA plant, while other countries with more competitive cost bases provide higher protection,” he added.

“[If] Pakistan does not address the [import tariff] issues, the company will move the PTA project to another location in the Middle East. A couple of possibilities are being explored,” Saad was quoted as saying.

Published in The Express Tribune, October 11^th, 2011.