PHILIPPINES: JG Summit naphtha cracker to come on stream by mid-2013

"The construction has been very fast, and it will be commissioned in mid-2013. Commissioning means that we will begin manufacturing the product,” Elsie M. David, product and research development manager of JG Summit Petro Chemical Corp., said in a chance interview.

Officials had earlier pegged operations to start by the latter part of 2013 while JG Summit Olefins Corp. had promised a 2014 due date to the Board of Investments (BoI) which granted tax perks to the project.

The state agency had justified the tax breaks by arguing that the petrochemical project was a strategic investment that would provide raw materials for virtually all other industries.

Construction of the $700-million factory for plastic resin in Barangay Simlong, Batangas City had begun earlier this year.

"This is the first naphtha cracker in the county. Before we are importing ethylene and propylene,” Ms. David said, explaining that the facility would complete the local industry's supply chain.

The plant, once completed, is set to produce 925,537 tons of polymer-grade ethylene and propylene, pyrolysis gas and other byproducts annually according to earlier reports.

The project is expected to directly employ 500 workers and support services should bloat that number to 2,000.

The project proposal has been revised three times since it was first docked with the BoI in 2005.

The petrochemical firm has blamed the delay on the global financial crisis which made credit scarce.

Aside from a six-year income tax holiday and other incentives such as the duty-free importation of equipment, the investment enjoys protection from competing imports via a 15% tariffs on foreign-made resin.

At one point, the government had threatened to rescind the tariff protection due to continued delays in the plant's construction.

The Philippine Plastic Industry Association (PPIA) had begun complaining that its members had to pay higher fees for their imports while the local manufacturing site remained unrealized.

But the Association of Petrochemical Manufacturers of the Philippines (APMP), of which JG Summit is a member, countered the PPIA petition, saying the tariff needed to be preserved.

The APMP had said that the investment will ensure consistent availability of resins at competitive prices and therefore enhance the collective value chain.

Source: Daily "Business World Online", Manila; 10 Oct 2011(Syed Rashid Ali, Karachi, Pakistan)