3 groups eye JG Summit’s naphtha proj

Three foreign groups based in Asia have expressed interest to join JG Summit Petrochemical Corp. in building its P26.25-billion naphtha cracker plant, according to a top company official.

JG Summit Holdings Inc. president and chief operating officer Lance Gokongwei, however, did not say whether these foreign firms would infuse new capital or extend a loan to the group.

Construction of the naphtha cracker facility is expected to start next year.

To be located in the 10-hectare JGSPC complex in Barangay Simlong, Batangas, the project would be a fully integrated project in the petrochemical industry.

A naphtha cracker plant is the grandparent of the whole plastics industry which converts a by-product in refining crude oil into petroleum products into monomer which is used as raw material by the intermediate industries.

The project, which had been given the green light by the Board of Investments (BOI) on pioneer status, will start commercial operation by December 2008 or early 2009 with around 300 employees.

A six-year income tax holiday, tax and duty-free importation of capital equipment will be accorded for this project.

JG Summit Holdings holds 82.28 percent stake in JGSPC while 17.71 percent is held by Japan’s Murubeni Corp.

Project financing will consist of 30 percent equity contribution and 70-percent loan.

BOI officials said this naphtha cracker plant will be beneficial to the midstream as well as downstream petrochemical industries that have long been dependent on imported feedstock.

The backward integration of JGSPC’s operation will result in combined capacities of the polyethylene plants to 350,000 metric tons a year from 180,000 MT a year and the polypropylene plants of 185,000 MT a year will be fully utilized.

An integrated petrochemical sector produces the crucial raw materials in making frames for electronics products and home appliances, packages of processed food, pharmaceuticals and a wide range of other manufactured goods, construction materials like PVC pipes, office furnishings, plus plain containers and wrappers.