Taiwan's Formosa open to renegotiations on Mailiao fire damages

18 August 2010 06:28  [Source: ICIS news]

By Pearl Bantillo

A view of Mailiao harbour in Taiwan Source; Industrial Development BureauSINGAPORE (ICIS)--Taiwan’s Formosa Plastics Group is willing to renegotiate with Mailiao residents on a compensation package for the health and environmental damage caused by major fires at its petrochemical complex in July, a company source said on Wednesday.

Protests broke out on Tuesday at Formosa’s Mailiao petrochemical site, as the second round of talks failed on Monday, when Formosa insisted on capping its payout of damages at New Taiwan dollars (NT$) 500m ($15.7m).

“We can still have a third or fourth negotiation,” said the source, who declined to be named.

“We don’t have the exact number now… But the compensation is still under negotiation,” the source said.

Thousands of Mailiao residents tried to block the three roads leading to Formosa’s Mailiao complex on Tuesday, demanding NT$1.8bn in compensation and insisting on the eventual relocation of the petrochemical facility, according to media reports.

Seven people were arrested for the protests that had led to violent clashes between the angry residents and the police, media reports added.

However, the protests had no impact on Formosa’s operations on Tuesday, the company source said.

“There was no damage to the company,” the source added.

Formosa earned the ire of Mailiao residents and caught the Taiwan government’s attention after two fire incidents occurred at its Mailiao facility within a span of three weeks, which raised questions about its safety standards in the petrochemical complex.

On 7 July, an explosion had shut Formosa’s 700,000 tonne/year No 1 cracker in Mailiao, while another fire broke out at the company’s 73,000 bbl/day residual desulfurisation (RDS) unit on 25 July.

Taiwan’s Premier Wu Den-yih had earlier demanded a full account on the cause of the recent fires at Formosa’s Mailiao complex, saying the affected facilities would not be allowed to restart until a satisfactory explanation was put forth.

The Premier was referring to Formosa’s RDS unit, said the company source, who added that the company was still looking into the reason for the 25 July fire, which had prompted a full shutdown of the company’s 540,000 bbl/day refinery for a few days.

Formosa had earlier resumed operations at two of its three crude distillation units (CDU) in Mailiao, but it had no definite timetable for when the third unit would be brought back on stream, the source said.

The third CDU was not affected by the fire, but it would be kept off line for now, due to current production economics, according to the source.

“We have the ability to restart the third unit, but it depends on margins and the optimisation of the refinery,” said the source.

Meanwhile, the company’s No 1 cracker – which had been shut since 7 July – was expected to come back on stream in late September or early October.

($1 = NT$31.84)

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By: Pearl Bantillo
+65 6780 4359



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