Announcement of IFC Investment in Philippine Petroleum Corporation, Philippines on February 4, 1971

~FOR IMMEDIATE RELEASE ...• INTERNATIONAL FINANCE CORPORATION . 1 8 1 8 H STREET. N.W., WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IFC 11,ress Release No. 71/ 3 Subject: IFC Investment in Philippine Febr~ry 4, 1971 Petroleum Corporation, Philippines The International Finance Corporation, of the World Bank Group, is joining Philippine, United States, and European interests to finance a $33.4 million refinery for production of lubricating oil base stocks. The refinery will serve the entire Philippine market for the next several years. A new company, Philippine Petroleum Corporation (PPC), will build and operate the refinery, which will be located at Pililla, Rizal. The project is sponsored by Meralco Securities Corporation (:MSC), a Philippine holding • company already involved in electric power supply 7 pipeline systems, construction, and manufacturing. At present, major oil companies operating in the Philippines import lubricating oil base stock for blending into finished lubricating oils and greases for auto100t ive~ industrial, and other uses. 1 PPC will produce seven grades of base stock which will be sold to these oil companies, replacing imports; it will also market the furl oil by-product of its refinery. PPC is scheduled to start commercial production in early 1973, with an initial annual capacity of 1.1 million barrels of lubricating oil base stock. A 40% expansion in capacity is planned after two to three years of operations, making it possible for PPC to satisfy estimated domestic require- ments until 1980 of the base stock varieties expected to be produced by its • refinery. At full capacity, in 1979, the project is expected to achieve net foreign exchange savings of over $11 million a year. tne refinery will employ about 180 people. /more·, . 1 .... -.:., • IDA P.R. No. 71/3 -- Philippines -- refinery - 2 - IFC is making a commitment of $8 millipn, consisting of a loan of $6.2 million and an equity investmen.:~ of $1.8 million. The investment in the new refinel"Y wili bring IFC's commitments to privately owned companies in the Philippines to approxim~tely $32.2 .million. ,; The total cost of the six projects IFC has helped to finance, including PPC, comes to nearly $240 million. With a share subscription in PPC of nearly $6.3 million equivalent, MSC, the sponsor, is providing approximately 53% of the new company's equity capital of $11. 87 million. IFC's subscription will provide about 15% and it is expected that most of the six major oil companies marketing in the • Philippines will participate in the subscription of the balance of the PPC equity capital. PPC has negotiated technical assistance agreements with')two United States firms -- Lummus Company and Caltex -- both of which have extensive ; experience i1r·::~ngineering and refinery operations. In addition, Stone and Webster Corporati.on has been retained as consultants by PPC. - 0 - •