JG, Meralco in talks over petrochem biz
MANILA, Philippines - The business groups led by tycoon John Gokongwei and businessman Manuel Pangilinan are discussing the possibility of extending their business partnerships in telecommunications and power into petrochemical business.
The Gokongweis have been wanting to grow this unit, a legacy business, that has been underperforming against other cash-generating units, including airline, retail, food and banking.
“We spoke about expanding the petrochemical part. We’re thinking of building a power plant. We could revive that," Manuel Pangilinan told reporters on the sidelines of the Manila Electric Co. (Meralco) 3rd quarter financial performance briefing.
"We could co-invest with them. We can build one to supply the grid, that’s in Luzon. There could be a form of synergy. Let’s see,” said the Meralco chairman.
Gokongwei and Pangilinan both have seats on the board of Meralco, a power giant. JG Summit bought the minority shares of diversified conglomerate San Miguel Corporation in Meralco over a year after it sold its telco unit, Digital Telecommunications, to Pangilinan's Philippine Long Distance Telephone Co. (PLDT), an industry leader. (READ: JG Summit to pay P72 billion for Meralco stake)
John's son, Lance Gokongwei, has said that Meralco is JG Summit’s “single-largest investment. It will be our main investment in the power sector. It's got a very dominant distribution business and they have the potential for growth through their investments in generation."
JG Summit will occupy 3 board seats in Meralco.
Lance Gokongwei was also upbeat on its petrochemical business as construction of its naphtha cracker plant was progressing as scheduled. Commercial operation is scheduled in 2014.
The naphtha cracker plant is seen to allow back integration with JG Summit’s existing polyethylene and polypropylene facilities which have so far imported ethylene and propylene inputs.
JG’s petrochem unit, JG Summit Petrochemical Corporation, is the first integrated polyethylene (PE) and polypropylene (PP) plant in the Philippines. It is a joint venture between JG Summit and Marubeni Corporation of Japan. - Rappler.com