Lack of project financing delays US$2.4 bln petrochemical investment in Jurong Island

16-Oct-08

A US$2.4 bln petrochemical investment planned by Jurong Aromatics Corporation (JAC) has not been able to close its project financing, and has hence been delayed. Lack of financing is an upshot of the global financial crisis, and has taken its toll on the complex, construction for which had earlier been planned to commence by the year-end. JAC is 60% owned by Jurong Energy Corporation - a group led by Vijay Goradia and M Y Ling, both founding members of the Continental Chemical Group. Swiss trader Glencore, South Korean SK Energy and Kuwait's Ikarus Petroleum each hold 10%, Jiangsu Sanfangxiang Industrial Group (China's largest polyester producer) and Singapore's EDB International hold 5% each. JAC has already completed the first phase of its debt financing in Q3, raising over US$1 billion. The consortium behind the project remains committed to building the Jurong Island facility and is working closely with its partners to ensure that financing for the project is comprehensively structured to robustly withstand global economic and financial volatility. While 37% of investment was planned to come from equity, US$1.55 bln was to be secured from debt financing, of which it had obtained close to US$1 billion in July. Meanwhile, construction on the Island, of two mega petrochemical complexes of Shell (at an investment of US$3 bln) and ExxonMobil (at an investment over US$5 bln) remains on track.