Sat, Feb 05, 2005 - Page 10 News List

Six shareholders finalize deal to build Yunlin Petrochemical Technology Park

CHEMICALS The six partners will invest NT$370 billion in the project, which will include a 300,000-barrel-a-day crude oil refinery and is expected to create 25,000 jobs

By Joyce Huang  /  STAFF REPORTER

Chinese Petroleum Corp (CPC, 中油) yesterday inked an agreement with five other shareholders to invest NT$370 billion (US$11.75) in the Yunlin Petrochemical Technology Park (雲林石化科技園區) project in a bid to increase the state-owned company's production of fuels and chemicals.

"It is estimated that the joint-venture project will create an output value of NT$300 billion per year, contributing growth of 0.91 percent to the nation's GDP," CPC chairman Kuo Chin-tsai (郭進財) said at a signing ceremony yesterday afternoon.

After Fubon Financial Holding Co (富邦金控) and China Development Financial Holding Corp's (中華開發金控) decision to pull out of the joint venture at the last minute, Kuo yesterday said that other partners would be welcomed, pending approval by the project's six original shareholders.

A joint decision by the project's six original shareholders would be necessary to allow the participation of any new shareholders in the future, Kuo said.

CPC will be the project's biggest shareholder with a stake of 43 percent. The other five shareholders are Chang Chun Group (長春集團), Oriental Union Chemical Corp (東聯化學), China Man-made Fiber Corp (中纖), Ho Tung Chemical Corp (和桐化學) and Yunlin-based Chuan Yang Investment Co (銓陽投資).

Chang Chun Group and Oriental Union Chemical Corp will each have a 20 percent stake, while China Man-made Fiber Corp will have a 10 percent share, Ho Tung Chemical Corp 5 percent and Chuan Yang Investment Co 2 percent.

According to Kuo, the project includes a 300,000-barrel-a-day crude oil refinery, a naphta cracker plant capable of producing 1.2 million tonnes of ethylene per year, an aromatics complex and 23 petrochemical derivatives. It will cover 1,826 hectares and create up to 25,000 jobs.

CPC president Chen Bao-lang (陳寶郎) said yesterday that, pending approval by the project's six shareholders, a joint-venture company with a nine-member board may be established by the middle of next month to prepare for the launch of the project's construction.

Since it would take another 12 to 18 months to complete the environmental impact evaluation of the designated harbor, Chen said that the nine-year project may see a slight delay in its completion date, which was originally set for 2014.

Chen said that, after Fubon and China Development's withdrawal, the project's return on investment may be reduced slightly from the previous projection of 13 percent.

However, how much the return on investment will be cut has not yet been calculated, Chen said.

"Financial-service companies may need an exact return rate to finalize their participation [in the project], which we are unable to provide at the moment," Chen told reporters yesterday.

By the end of March, the six shareholders will proportionately allocate up to NT$600 million in initial capital to launch the project's preparatory work, Chen said.

According to Chen, six shareholders will inject a total of NT$123 billion into the project, while the remaining two-thirds of capital will be secured from future bank loans.

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