Monday, 21 December 2009

JG Summit to push P34-B cracker project

By BERNIE CAHILES-MAGKILAT
Manila Bulletin
http://mb.com.ph/articles/234905/jg-summit-push-p34b-cracker-project

The Gokongwei Group has vowed to pursue its naphtha cracker plant project saying the Korean Export Import credit agency, which is largely funding the proposed P34.38 billion plant in Batangas, has finally given the go signal for the project’s financing.

This was made clear by Lance Gokongwei, president of JG Summit Holdings Inc., to reporters covering the awarding ceremonies for The 1st BoI Recognition Awards for Investors in which the Gokongwei firm as one of the “Guinogulan Awardees.”

“A naphtha cracker plant project is highly dependent on financing and because of the financial crisis there was no development with the Korean Import-Export Bank, but with the economic recovery now the Korean credit agencies are supportive of our project. We are still in discussion about the financial requirements,” Gokongwei explained on the cause of delay in the project’s implementation.

He also said they are not talking to other financier for the project noting that this project is largely to be funded by the Korean credit agency.

Originally, the Gokongweis had proposed to start commercial operation of its naphtha cracker plant in 2008 when they registered the project with the Board of Investments in 2005 under JG Summit Petrochemical Corp.

In May 2008, however, the company revised the project with a new commercial operation target of January 2012. At that time, the project cost already ballooned to P34.38 billion, P8.7 billion more than its original P25.6 billion and under an entirely new unit – JG Summit Olefins Corp.

Even as discussions are still ongoing with the Korean credit agency, Gokongwei said, “We are pushing with the design and site development and we expect to operate the plant in 2013,” Gokongwei said.

The project’s commercial operation is now moved a year later from its revised schedule.

The company is also pouring in its own initial equity investments of $30 million for the engineering work of the plant. Gokongwei said they have already signed an agreement with technology provider Lumus Ltd. to start the site and design development in March next year.

If the financing package from the Korean Eximbank is completed by May to August next year, Gokongwei said then the project is a sure go.

As if to assure that they are really bent on pursuing their naphtha cracker project, Gokongwei said they would not put up their own $30 million equity for the engineering work if they do not intend to push through with the project.

Based on its revised project registration with the BoI, the naphtha cracker plant would have a production capacity of 320,000 metric tons of ethylene, 190,000 metric tons of propylene, 270,000 MT of Py gas, and other by-products such as methane, pyrolysis fuel oil and acid gases.

The plant would be located in barangay Simlong, Batangas City, near its existing polypropylene and polyethylene plants. The naphtha cracker project is an upstream activity for the polyethylene business.

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