PHILIPPINES: JG Summit sets 2013 start of naphtha cracker

JG Summit Holdings Inc. expects its naphtha cracker plant in Batangas City to be operational by the last quarter of 2013.

“We’ve completed the site preparation. So, we are now in erection stage. We’ve already ordered all the long lead time items such as the furnaces, the compressor and the power plant,” Lance Gokongwei, president and chief operating officer of JG Summit told reporters.

Gokongwei said the company will spend $700 million to $800 million to construct the plant.

“We are on track to complete the project. We are operating in the latter part of 2013,” he said.

The plant has an annual capacity of 320,000 metric tons of ethylene, 190,000 MT of propylene and 216,124 MT of pygas.

“We are also expanding our polyethylene production from 200,000 MT to 310,000 MT annual capacity,” Gokongwei said.

He said the capacity of its naphtha cracker plant can produce more than the entire Philippine requirement.

“We have to export in markets like Vietnam and China,” Gokongwei said, adding that 30 percent of its polyethylene production will be exported to those markets.

The naphtha cracker project of JG Summit Olefins Corporation is a back integration for the existing polyethylene and polypropylene plants of JG Summit Petrochemical Corp.

JGSOC was registered with the Board of Investment in 2010 as a new producer of ethylene, propylene, pygas and other by-products.

Originally registered with the Board of Investments in 2005, the project has suffered delays because of capital problems.

The company is entitled to certain tax and non-tax incentives such as income tax holiday for six years from January 2014 or from actual start of commercial operations, whichever comes first.

Other incentives are the deduction from taxable income of 50 percent of wages corresponding to the increment of direct labor; employment of foreign nationals, tax credit for taxes and duties on raw materials and supplies and semi-manufactured products used on its export products, among others.

(Syed Rashid Ali, Karachi, Pakistan)