JG Summit Petrochem seeks new pioneer status with BOI

JG Summit Petrochemical Corp. (JGSPC) has re-applied for registration with the Board of Investments (BOI) on a pioneer basis as a new domestic producer of ethylene, propylene, pyrolysis gas and other by-products.

Based on its application documents with the BOI, the JGSPC naphtha cracker project would have a cost of P26.247 billion to be financed primarily from loans amounting to P18.373 billion and equity contribution of P7.874 billion.

The JGSPC naphtha cracker project is scheduled to start commercial operation by December 2008.

The projected output of JGSPC is 318 metric tons of ethylene, 189 MT of propylene, 218 MT of py gas, 150 MT of fuel gas (for JGSPC’s own use) and 28 MT of fuel oil (of which 16 MT or 58 percent would be for JGSPC’s own use and 12 MT or 42 percent for sale).

JGSPC’s major stockholder is JG Summit Holdings Inc. with 82.28 percent, followed by Marubeni Corp. with 17.71 percent.

The JGSPC naphtha cracker project to be located in Batangas would be the first in the country and would complete the full integration of the petrochemical industry, cutting down dependence on imported ethylene and propylene feedstock.

The JGSPC naphtha cracker project is a backward integration of JGSPC’s existing polyethylene (PE) and polypropylene (PP) plants.

With the new naphtha cracker facility, it is projected that the combined capacities of the PE plants would increase from 180,000 MT per year to 350,000 MT per year and PP plants of 185,000 MT per year would be fully utilized.

The naphtha cracker project was previously registered in May 2004 with the BOI as a new domestic producer of ethylene and propylene with a projected cost of P14.406 billion (at the then exchange rate of P28 to $1) and was supposed to start commercial operation last October 2004.

However, due to the expected changes in the scope of the project, JGSPC has requested the cancellation of its BOI registration without prejudice to its re-application.

The BOI agreed to cancel JGSPC’s previous registration without prejudice to JGSPC’s re-application.

The higher project cost of P26.247 billion is based on an exchange rate of P56 to $1. JGSPC was established on Feb. 24, 1994.

JGSPC had recently asked the Department of Trade and Industry for a six months extension of the "milestone" review of its commitments regarding it naphtha cracker project.

JGSPC, a joint venture between JG Summit Holdings of taipan John Gokongwei and Marubeni Corp. of Japan, explained to the DTI that it has not yet closed a vital loan for it proposed naphtha cracker facility in Batangas City.

As such, JGSPC has moved back the financial closing of a loan for its proposed naphtha cracker facility to December this year instead of June.