JG Summit may join $600-M naphtha project

JG Summit Holdings Inc., the investment arm of the Gokongwei family, may join the government-led consortium that will build the $600-million naphtha cracker plant in Bataan, PNOC-Petrochemical Development Corp. (PPDC) president Jose Gangan said.

"Based on our recent talks, JG Summit will join the group," Gangan said without giving any details.

So far, there are only two polypropylene plants in the country. One is being run by JG Summit and Marubeni of Japan, and the other by Petrochemical Corp. of Asia-Pacific (Petrocorp) controlled by the Garcia group.

The naphtha cracker plant is deemed necessary for JG Summit and Petrocorp since this will produce raw materials needed for their polyprophylene plants.

Energy Secretary Jose Isidro Camacho, said the government is "very committed" to the project. In fact, PPDC is planning a bond offering by the second or third quarter this year to finance its equity participation in the project.

The government, through its petrochemical subsidiary PNOC-Philippine Petrochemical Development Corp. (PPDC), is eyeing a 34-percent stake in the cracker project. But, the company is willing to reduce its equity to give way for more private sector participation.

Last year, a memorandum of agreement (MOA) was signed among the 11 prospective foreign and local investors of the project, excluding JG Summit.

Gangan said they will renew the MOA next week to give way for the entry of new investors and the finalization of the equity structure for the project by middle of the year. "We need to renew the MOA which will expire soon," Gangan said.

Those firms which signed the MOA are: Petrocorp, Petron Corp., Bataan Polyethylene Corp., Philippine Resins Industries Inc., Itochu Corp., D & L Industries, BP Amoco, Sumitomo Corp., Mitsubishi Corp., Mitsui and Co., and Marubeni Corp.

Petrocorp is eyeing 10 percent of the cracker plant project. PPDC started accepting last January the tender offers from potential financial advisors for the planned naphtha cracker project.

The plant will be constructed within the petrochemical park of the PPDC in Mariveles, Bataan. If equity structure will be finalized middle of the year, the construction of the plant will start by 2003 and will be operational by early 2004.