Cabinet requests FPG to suspend operations of petrochemical factories for checkup.
Taipei, Aug. 1, 2011 (CENS)--In the face of the litany of fire incidents, the Executive Yuan (the Cabinet) requested yesterday (July 1) Formosa Plastics Group (FPG) to suspend the operation of all the related factories numbering around 30 in its petrochemical complex in Mailiao offshore industrial zone for examination of its facilities.
The cross-ministry meeting also requested FPG to suspend the operation of other facilities in the industrial zone in batches for examination within one year. Operation of the facilities can be resumed only after the supervision and approval of a fair domestic or foreign third party, according to the resolution of the meeting.
The Ministry of Economic Affairs (MOEA) noted, however, that the resolution is just an effective and feasible request, rather than a mandatory administrative decree, urging FPG to conduct a comprehensive self checkup, with the schedule for resumption of operation entirely lying in the hands of FPG.
Due to the suspension of some factories' operation, total revenue of the four major subsidiaries of FPG, namely Formosa Plastics, Nan Ya Plastics, Formosa Petrochemical, and Formosa Chemicals & Fibre, will drop by NT$35 billion in August from the level before the outbreak of the fire in May. Institutional investors estimated that their total profits will decline over 20% year-on-year in the third quarter.
A manager of Formosa Plastics remarked that under the request of the Executive Yuan, operation of some 30 factories, about half of the total 66 factories in the industrial zone, will be suspended. All of FPG's four major subsidiaries will be affected.
The shutdown of those factories will impact gravely downstream petrochemical market, in view of the leading role of FPG in the regional petrochemical market. Formosa Plastics, for instance, is the world's second largest PVC producer, while Nan Ya is the world's fourth largest EG producer, and Formosa Chemicals and Fibre is the largest PTA producer in the world. Suspension of supply by FPG will lead to shortage of materials for a wide range of downstream industries, including diesel oil, aviation oil, electronic products, plastics, and apparel.
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|Title Annotation:||Formosa Plastics Group|
|Publication:||The Taiwan Economic News|
|Date:||Aug 1, 2011|
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