PCGG looking for few good investors to help reopen shuttered coco firm
MANILA, Philippines—The Presidential Commission on Good Government (PCGG) is in talks with a possible foreign investor to revive the loss-making United Coconut Chemicals Inc. (Cocochem).
One of the coco levy-funded companies sequestered by the first Aquino administration in 1986, Cocochem reportedly incurred “unprecedented losses” under Arroyo-administration caretakers since 2005 to the extent that the present board appointed by the current Aquino administration decided last year to shut down plant operations “indefinitely.”
“We had to shut it down because it was bleeding (financially),” said PCGG Chair Andres Bautista.
Only a handful of Cocochem’s original 200 staff members were retained as a result of the shutdown, Bautista said.
The PCGG and the current Cocochem board headed by executive vice president and chief operating officer Evelina Patiño, who was appointed in January 2011, are looking for investors to restart the firm’s operations.
“To open again we need capital to upgrade the equipment,” Bautista said.
He said talks were due to open soon with at least one foreign investor, whom he did not name.
Established in 1981 to boost the local coconut industry, Cocochem buys coconut oil to manufacture various oleochemicals for the domestic and foreign markets.
Its main products include fatty alcohol which is used in the manufacture of soap, detergent and cosmetics, and glycerine.
In her report to the PCGG explaining the Cocochem board’s decision of June 18, 2012, to shut down the plant, Patiño chronicled the alleged mismanagement during the watch of former Cocochem presidents Helen Osias and Dr. Carlito Puno that allegedly led to huge losses, the deterioration of equipment and the loss of skilled personnel.
In 2010, Cocochem posted a net loss of P10.5 million. The situation worsened in 2011 when the company reported a net loss of P318 million, according to the PCGG.
“With the expected losses in 2012 of $7.3 million [roughly P312 million], the company will be void of any cash reserves to enable it to continue to operate,” Patiño said.
“Cocochem suffered massive losses due to the high level of unsold inventory whose value had to be written down,” she added.
The plant no longer operated in 2012 due to high coconut oil costs “which made the business not viable,” she said.
While the Philippines was one of the first countries in Asia to produce oleochemicals, the country has been surpassed by Malaysia and Indonesia.
In a recent roundtable discussion sponsored by the Department of Science and Technology, Patiño said Malaysia and Indonesia now supply 42 percent of the market for oleochemicals.
“The trend has shifted from Europe to Asia. But we hardly have anything to speak of where cocochemical production is concerned,” she said.
According to Patiño, Pilipinas KAO and PIDI are the only basic oleochemical plants operating in the Philippines since Cocochem, Pan-Century, IPI and Lina Holdings had either stopped operations or closed shop.
