Downstream alliance proposes tolling scheme for Bataan Polyethylene Corp

Efforts are being made to keep the Bataan Polyethylene Corp. (BPC) operational through a tolling arrangement with end-users.

Raul T. Concepcion, convenor of the Alliance of Concerned Dowstream Industries and End Product Manufacturers, said yesterday that there is a proposal to create a consortium of big end-product users which would import the monomers and have the BPC process the ingredients through a tolling arrangement.

However, the proposed tolling arrangement would be implemented for only three years or up to Dec. 31, 2005 and would be preconditioned to the construction of a naphtha cracker plant.

"The proposal would be a win-win solution for everybody as BPC would be kept viable," Concepcion said.

"This proposal, however, has not yet been presented to the creditors of BPC," he added.

The tolling arrangement was merely suggested during a meeting of the newly-formed alliance last Saturday.

There is even the possibility, Concepcion said, that the tolling arrangement could be offered to the two other petrochemical firms – Petrocorp and JG Petrochemical Corp. – as a solution to their current excess capacity problem.

"The proposed tolling arrangement would be temporary and BPC would have to go on its own by 2006," Concepcion said.

During the same meeting, the group also agreed to push for a "10-10 compromise" on tariff issue.

From the original proposal of the downstream industries to push for a seven-percent tariff on resins and a five-percent tariff on finished plastic products, there is a new proposal to bring the rate on resins to 10 percent and finished products also to 10 percent.

Government has not yet finalized what tariff it will seek for the petrochem sector upon the effectivity next year of the Common Effective Preferential Tariff (CEPT) scheme under the Asean Free Trade Area (AFTA).

Under the CEPT/AFTA, the Philippines is supposed to bring down its tariff rates to between zero and five percent.