Published July 29, 2009

US$10b refinery to break even in 8 years: Merapoh

	Email this article
	Print article
	Feedback

(KUALA LUMPUR) Merapoh Resources Corp Sdn Bhd, which will develop a US$10 billion refinery in Kedah, expects to break even in as early as eight years after production starts, helped by demand and a 10-year tax holiday, according to a report in Malaysia's Business Times.

To be located in Sungai Limau, Yan, the 350,000 barrels a day refinery is due to start production by 2013 or early 2014.

Merapoh founder and executive chairman Nazri Ramli said the company will make money from fees for processing the crude oil.

'Clients will pay a fee that is controlled per barrel to make sure there is enough money to pay to the bank or the investment, and enough to pay operators and profit margin or dividends to the shareholders.

'We are also blessed with tax relief for 10 years by the federal government whereby the profit that we make will not be taxed until we recover our cost. This will enable us to pay dividends. It is a good incentive,' he told MBT.

Mr Nazri explained that the gross profit margin for a refinery is normally about 20 per cent of the current price of crude oil.

On July 15, Merapoh signed a memorandum of agreement with the Kedah state government for the site, including an area to be reclaimed, and with South Korea's SK Group of Companies to build the plant.

It has lined up China National Petroleum Co (CNPC) to buy the refined crude, while Saudi Aramco will be the crude supplier.