Minister of Economic Affairs Shen Jong-chin (沈榮津) yesterday said the government would look at alternative plans to dispose of the nation’s fifth naphtha cracker this year if Indonesia’s state-run oil and natural gas supplier PT Pertamina turns down a deal to buy the facility next week.
“We can’t force Indonesia to buy the entire facility... We must respect the decision they are to make next week,” Shen said ahead of the ministry’s weekly meeting.
Shen’s remarks came after the Chinese-language China Times reported that PT Pertamina might reject the deal due to the facility’s limited production capacity.
The newspaper said that the Indonesian company is worried that the naphtha cracker’s annual ethylene output is only 500,000 tonnes, compared with the 1 million tonnes generated by a new facility.
In light of PT Pertamina’s concerns, CPC Corp, Taiwan (CPC, 台灣中油) would evaluate other alternatives to dispose of the facility in Kaohsiung’s Nanzih District (楠梓), Shen said, adding that CPC might reach out to other potential buyers or, in the worst-case scenario, auction off the plant’s equipment.
CPC president Lee Shun-chin (李順欽) said that both CPC and PT Pertamina are still trying their best to make the deal happen.
“A small group of CPC’s high-ranking officials will fly to Indonesia early next week to talk with PT Pertamina before it makes a decision,” Lee said.
The Kaohsiung naphtha cracker was built in the 1990s and shut down at the end of 2015. CPC has been trying to sell the facility to foreign buyers for the past three years and has promised nearby residents it would remove the facility before the end of this year.
CPC on Oct. 6 last year inked two different memorandums of understanding (MOU), one with PT Pertamina regarding the sale of the naphtha cracker, and the other with firms from India regarding the construction of a new petrochemical park in India.
Under its MOU with CPC, PT Pertamina must reach a decision by March 31 based on a US consulting firm’s evaluation, Lee said.
CPC plans to invest NT$170 billion (US$5.83 billion) in the petrochemical park in India’s Mundra special economic zone, the ministry said.
Separately, Shen said two types of Taiwanese businesses could be impacted by trade penalties that the US is expected to impose on China for contravening intellectual property rights and being involved in illicit technology transfers.
They are Taiwanese businesses whose products are made in China then sold to the US and those that are part of the supply chain of businesses providing components that are shipped to China to be assembled, he said.
To reduce the impact of any changes, businesses should try to gain more industrial autonomy and be more competitive, Shen said.
Additional reporting by CNA
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