Foreign firms to conduct studies for $600-M naphtha cracker plant

The PNOC-Petrochemical Development Corp. (PPDC), the petrochemical arm of state-owned Philippine National Oil Co. (PNOC), has selected foreign firms to conduct a technical and feasibility study for the proposed $600- million naphtha cracker plant.

PPDC president Jose Gangan said they have commissioned Forster Wheel-Unico and Chemsystems Inc. to conduct the technical and feasibility studies, respectively, of the naphtha plant.

Gangan said they expect the study, which will involve both engineering and viability of the proposed project, to commence next month.

According to him, they will choose a financial advisor for the project very soon. "We may be able to decide who will be the project’s advisor sometime April or May," he said.

Among the foreign investment firms which have submitted proposals to become financial advisor to the project are: ABN Amro, Chase Manhattan, Lehman Brothers, Deutsche Bank, Bank of Tokyo Mitsubishi, Sumitomo Bank and Bank of America.

Last December, PPDC was assigned to select the technical and financial advisors for the said project. With the assignment of the technical and feasibility study group, Gangan, said they expect the project to proceed as scheduled this year.

PPDC is eyeing a 34-percent stake in the naphtha cracker project, to be constructed within its petrochemical park in Bataan. But, Gangan indicated PPDC’s willingness to reduce their equity in the project in case a private strategic partner wants more stakes.

PPDC, which was established in 1993, is expected to develop the country’s first integrated petrochemical industry. It has a complex located in Limay and Mariveles, Bataan. The property is approximately 520 hectares and will be developed in stages.

Phase 1 of the petrochemical complex include common facilities such as feedstock, pier, road network and power and water distribution system. Three petrochemical plants are currently located in the complex namely: polypropylene, polyethylene and polyvinyl chloride plants all established through the use of local and foreign equity.

PPDC will finance its share in the naphtha cracker plant through its planned bond offering in the second or third quarter of this year.

If the equity structure is finalized within the year, the construction of the project is scheduled to start by 2003. The plant will be operational by early 2004.