Petrocorp runs out of funds, taps foreign strategic partner

The Petrochemical Corp. of Asia-Pacific (Petrocorp.) has tapped a foreign strategic partner to help fund its shelved polypropylene plant.

Energy Secretary Mario V. Tiaoqui said Petrocorp officials admitted that they have fallen shor of funds and have sought the assistance of a financial strategic partner which was not identified.

"My conversation with Petrocorp chairman Antonio Garcia indicated that they have tapped a strategic partner for their plant," Tiaoqui said.

Petrocorp’s problem, according to the energy secretary stems from an underestimation of the working capital requirements of the polypropylene plant. It was aggravated by the depreciation of the peso which will make their raw material purchases more costly.

"That in turn increased their financial costs making their original estimates obsolete," Tiaoqui said.

Nevertheless, he said the project remains sound and viable, However, the energy secretary said they have not made any commitments regarding the December deadline for the operation of the plant.

Meanwhile, the energy secretary reported that the planned naphtha cracker plant is already in place.

"We are moving forward and we will be hiring consultants for the technical and financial segments of the projects. We are proceeding ahead although we have to be careful what the market projections would be. As it would have an impact on the economic of the project."

He indicated that incentives for the project have been initiated, and that there are still other incentives tabled with the Department of Trade and Industry (DTI) and the Board of Investment (BOI), including other legislative proposals still pending in the lower house.

Other parties affected by the petrochemical facility in Bataan are JG Summit Holdings, Petron Corp., British Petroleum, Itochu Corp., Sumitomo Corp., Chinese Petroleum Corp., and the PNOC-Petrochemical Development Corp. (PPDC).

The country’s first naphtha cracker plant will have an estimated capacity of 600,000 to 700,000 metric tons.

Tiaoqui said it is crucial for the country to have its own cracker plant which could serve the local demand for basic raw materials used for the manufacture of plastics. The plant could supply the downstream petrochemical sector heavily depend out on monomers and polymers.– Ted Torres