Cabinet-TRM committee to grant only post operative tariff protection to JGSPC's naphtha cracker

27-Aug-05

Facing huge cost in setting up the country's first naphtha cracker plant, JG Summit Petrochemical Corp (JGSPC) has stressed the need for tariff protection. While doing so it is seeking an explanation on the Cabinet-TRM committee's decision to give up the tariff protection on the local petrochemical industry by declaring that the tariff cover is important to make its proposed P26.25-billion naphtha cracker plant a possible enterprise. The new decision of the Cabinet-TRM committee has upheld its earlier verdict as it viewed higher tariffs to be burdensome for the downstream petrochemical players and the consumers. The issuance of the new order will supersede the EO 161 issued by Malacanang in 2003 suspending the implementation of the tariff reduction schedule adopted by Southeast Asian nations for petrochem under the AFTA. The tariffs of only 11 petrochemical items excluded from the AFTA scheme will be reduced to five percent. These will include polyethylene (PE), polypropylene (PP) and PP with co-polymers, expansible polystyrene (PS), polyvinyl chrloride (PVC), plasticized and nonplasticized PVC. However JGSPC is likely to be granted a post operative tariff protection once its project commences. JGSPC has recently released the bids made by three Asian firms competing for the contract to build the cracker plant near its existing polyethylene and polypropylene plants in Batangas. The company will now evaluate the winning bid considering the time table, cost, details on project execution and the help the contractor can extend in the commissioning of the plant.