JG Summit seeks extension of import duty-free privilege

JG Summit Petrochemical Corp. (JGSPC) is asking the Board of Investments (BOI) to extend JGSPC’s availment of the duty-free importation of capital equipment to 2007 even though the incentive is supposed to expire by 2006.

According to JGSPC, the machinery for its proposed naphtha cracker plant is scheduled to be delivered only by 2007 as completion of the project is still in 2008.

At the same time, JGSPC also informed the BOI that it has appointed Deutsche Bank to be its financial advisor for its financing of the naphtha cracker project.

JGSPC had recently gotten BOI approval for the registration 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, however, 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.

However, 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.

JGSPC was established on Feb. 24, 1994.

JGSPC, a joint venture between JG Summit Holdings of taipan John Gokongwei and Marubeni Corp. of Japan, 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.