JG Summit revives plan to build naphtha cracker plant

JG Summit Petrochemical Corp. (JGSPC) has decided to revive its plan to build a naphtha cracker plant with a 350,000 metric tons per year at its petrochemical site in Batangas City.

Wilfredo A. Paras, executive vice president and chief operating officer of JGSPC, said the naphtha cracker project is expected to come onstream in the first half of 2008.

The project, Paras said, would ensure a reliable and competitive source of feedstock for JGSPC’s polyethylene and polypropylene plants which have been operating since 1998.

With the integration of a naphtha cracker plant, Paras said, it would enhance the profitability of JGSPC’s operations and allow the company to "weather and even benefit from the cyclicality inherent in this business."

Paras added that "this backward integration move will go a long way in making the Philippine petrochemical industry globally competitive and will definitely encourage further investments in midstream and downstream industries."

JGSPC had gotten approval as far back as March 2001 from the Board of Investments to maintain its BOI registration for its planned naphtha cracker project.

JGSPC’s retention of its prior registration would entitle it to income tax holiday incentives.

JGSPC, which is a joint venture between JG Summit Holdings and the Marubeni Corp. of Japan, had come up with the naphtha cracker plan way back in 1998.

It takes about four years to put up a naphtha cracker plant.

Monomers is the raw material used to make plastic products.

Based on JGSPC’s projection of its own output, the plant would produce about 300,000 to 350,000 metric tons.

The JGSPC naphtha cracker project has been moribund since 2001 following competing plans by a PNOC Petrochemical Development Corp. (PPDC) consortium to put up its own naphtha cracker plant.

Unfortunately, PPDC decided to abandon its plans after it failed to attract enough investors to finance the expensive naphtha cracker project.

Way back in 2001, the investment needed for a naphtha cracker project was estimated at around $600 million to $700 million.

Government, however, has always preferred having only one naphtha cracker project to ensure its viability.

JG Summit is the holding firm of taipan John Gokongwei Jr.