Published
June 28, 2017, 10:01 PM By James A. Loyola
JG Summit Holdings,
Inc., the flagship of the Gokongwei family, is investing an additional $700
million for the expansion of its petrochemicals business through subsidiary JG
Petrochemical Corporation.
In an interview after
the firm’s annual stockholders’ meeting, JG Summit President Lance Gokongwei
said this will boost their total investment in the petrochemicals business to
$2.2 billion.
“We’re preparing the invitations to bid so we
expect, basically, to award all the major packages (engineering, procurement,
and construction contracts) by the end of the year,” he said adding that “we
hope to be operational by 2021.”
Gokongwei said the
expansion consists of five projects. “One is the expansion of our naphtha
cracker. The second is the expansion of our polypropylene plant. The third is a
brand new polyethylene factory. The fourth is an aromatics factory. The fifth
is a butadiene plant,” he said.
“The projects will
increase the naphtha cracker capacity by 50 percent. We’re also increasing the
polypropylene by 50 percent, and we’re putting in a new polyethylene, new
butadiene and new aromatics factory,” Gokongwei explained.
The funding for the
expansion will be from the free cash flow of the existing petrochemicals
business plus some borrowings.
Gokongwei said “most
people project that petrochemical demand will grow one and a half times GDP so
we are hoping that polymer demand will continue to grow 9 to 10 percent in the
Philippines and in the region… we think we’ll be able to have a world class
cost structure to compete in this business.”
JG Summit is allotting
P48.2 billion for capital expenditures this year, higher than the P41.9 billion
spent in 2016 with its airlines unit spending about P18 to P20 billion, P7
billion for the food business, P15 billion for the property business, “a few
hundred million” for its bank and the balance for the petrochemicals unit.
Gokongwei said they aim
to boost the growth of their banking which is aiming to have assets of P200
billion by 2020 from the current P80 billion.
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