Mathematical programs with equilibrium constraints (MPECs) form a relatively new and interesting subclass of nonlinear programming problems. In this paper we propose a novel method of solving MPECs by appropriate reformulation of the equilibrium conditions. The reformulation can be easily incorporated in a certain class of interior point algorithms for nonlinear optimization. The algorithm used in the study follows a primal-dual interior point approach and shows encouraging results on a test suite of MPECs. The algorithm is also able to perform optimization of distillation columns with phase changes and tray optimization using only continuous variables. We also consider a number of topics to improve performance of the algorithm and to identify classes of process engineering problems that can be handled as MPECs. (C) 2003 Elsevier Science Ltd. All rights reserved.