Fallout of JAC reaches Sembcorp and PEC

Singapore

THE ripples of Jurong Aromatic Corporation's (JAC) troubles have reached at least two listed companies, though the firm's receivership status has had limited impact on the rest of Singapore's petrochemical sector.

Sembcorp Industries made a provision for S$19 million before tax for the quarter ended Sept 30, while specialist engineering group PEC impaired a S$19 million debt, which pushed it into the red for its financial year ended June 30, 2015.

Sembcorp has a 20-year agreement with JAC for the supply of steam and other water and wastewater treatment services.

The company's management is now working with the receivers on the path forward for JAC, said a Sembcorp spokeswoman in response to BT queries, adding that the contracts with JAC remain, and utilities and services continue to be provided.

"We view the appointment of a receiver for JAC as a positive development, as this would lead to more clarity on the path forward for the company," she said.

"As a newly built aromatics complex, we believe that JAC's plant is commercially feasible. As long as the plant is operational, it will require utilities. We therefore believe that we are in a strong position to recover the debt."

Similarly, PEC is still providing maintenance services to JAC. As these are in response to instructions by the receivers, the company is confident of receiving payment for them.

For outstanding debt before that, however - in particular those incurred when PEC helped JAC with the starting up of the plant - "we don't look favourably on those claims", PEC associate director of corporate services Yoong Koon Teck told BT.

JAC is also the first customer of the Jurong Rock Caverns, taking up most of the 480,000 cubic metres provided by the first two caverns to store condensate feedstock.

A spokeswoman for JTC Corporation said that the caverns were "fully operational" under its operator Banyan Caverns Storage Services, a consortium comprising Vopak Terminals Singapore (45 per cent), international engineering firm Geostock SAS (35 per cent) and local engineering group Jurong Consultants (20 per cent).

"Our marketing efforts for the Jurong Rock Caverns continue as normal," she added.

READ MORE: Receivers for JAC mull over revival plan via third-party usage