JG Summit Holdings Inc., the investment company of industrialist John Gokongwei, is seeking an engineering, procurement and construction contractor for its $700-million five-segment petrochemical project expansion, a top executive said Wednesday.
JG Summit president and chief operating officer Lance Gokongwei told reporters the company had started issuing the invitation to bid for the EPC contractor and planned to award the contract within the year.
“For our petrochem business, we are targeting a run rate of 95 percent for 2017 and will be optimizing operations and raw material supply so as to achieve high run rates for both the cracker and polymer plants. For our expansion projects this 2017, we are on track with the completion of the engineering studies,” Gokongwei said.
JG Summit allocated P48.2 billion for 2017 capital expenditures, higher than P41.9 billion it spent in 2016, to expand operations of core businesses.
Gokongwei said about P18 billion to 20 billion would be spent for the airlines business, P7 billion for food, P15 billion for property, “a few hundred million pesos” for banking and the rest for the petrochemical expansion.
“Funding will come from free cash flow from existing petrochem business plus borrowing,” he said.
JG Summit’s core subsidiaries are JG Summit Petrochemicals Group, Universal Robina Corp., Robinsons Land Corp., Cebu Air Inc. and Robinsons Bank Corp. The company spent P9.3 billion in the first quarter.
Gokongwei said the petrochemical expansion in Batangas City was expected to be completed by 2021. He said once competed, total investments in the project would reach $2 billion.
“With naphtha prices relatively low, with oil prices relative low, then Southeast Asia becomes more competitive with US and other gas-based cracker,” Gokongwei said.
“We will have a world class structure to compete in this business,” he said.
JG Summit Petrochemical received an approval from the Board of Investments for the expansion project that would increase the current naphtha production by 50 percent.
The company is currently the largest manufacturer of polyolefins in the country with current production capacities of 320,000 metric tons per annum for polyethylene and 190,000 metric tons for polypropylene.
JG Summit posted a 22-percent decline in net income in the first quarter to P7.5 billion from P9.6 billion in the same period last year. First-quarter revenues climbed 11 percent in the first quarter to P67.5 billion, on the strong performance of petrochemical business.