Kiani Lestari gets reforestation funds for its pulp factory<\/p>\n
JAKARTA (JP): Minister of Forestry Djamaludin Suryohadikusumo
\nconfirmed yesterday that his ministry had lent Rp 250 billion
\n(US$108.70 million) in reforestation funds to PT Kiani Lestari
\nfor its pulp and paper factory.<\/p>\n
Djamaludin said the loans were given to the company \"to save
\nstate funds\" in Kiani Lestari's pulpwood estate, which was ready
\nfor harvest.<\/p>\n
\"If we don't help (the factory), the seven-and-eight-year-old
\ntimber at Kiani Lestari's pulpwood estate cannot be harvested and
\nthe government will suffer losses, because it has a 40 percent
\nstake in the timber estate,\" he told reporters.<\/p>\n
He said the ruling did not only apply to Kiani Lestari, which
\nis controlled by timber baron Mohamad \"Bob\" Hasan.<\/p>\n
\"The government may provide loans from reforestation funds to
\npulp and paper companies whose pulpwood estates were built
\n(partly) using reforestation funds,\" Djamaludin said.<\/p>\n
But he said the funds should be complementary.<\/p>\n
\"Eighty percent of a factory's construction should be paid for
\nby a company's own sources... so it does not rely too much on
\nreforestation funds,\" he said.<\/p>\n
Reforestation funds would comprise only 20 percent of the
\ntotal investment in a factory, and they would be granted after
\nconstruction has been completed, he said.<\/p>\n
According to regulations, reforestation funds -- which are
\nraised from concessionaires' fees -- should only be used for
\ndeveloping timber estates.<\/p>\n
Bob Hasan signed a syndicated loan last May to finance the
\nconstruction of Kiani Lestari's pulp plant in the East Kalimantan
\nvillage of Mangkajang in Berau regency.<\/p>\n
Bank Negara Indonesia 1946 arranged the US$410 million
\nsyndicated loan, and Bank Dagang Negara and Bank Umum Nasional
\nwere co-arrangers.<\/p>\n
According to reports, President Soeharto issued a presidential
\ndecree earlier this month instructing the Ministry of Forestry to
\nloan reforestation funds to Kiani Lestari's pulp factory.<\/p>\n
Djamaludin acknowledged yesterday that the decree existed.<\/p>\n
Bob Hasan said the loan would help pay for the $930 million
\nfactory: $520 million of the would be self-financed by the
\ncompany.<\/p>\n
The 3,400-hectare factory, expected to produce up to 1,500
\ntons of pulp a day or 500,000 tons a year, is to start production
\nin early 1997.<\/p>\n
Raw material for the Kiani Kertas factory is expected to come
\nfrom Kiani Lestari's 180,000 hectares of pulpwood plantations in
\nEast Kalimantan.<\/p>\n
Djamaludin said the loans to Kiani Lestari would have an
\nannual interest rate of 6.7 percent and a maturity of eight
\nyears, including a three-year grace period.<\/p>\n
\"This is not government equity participation or a joint
\nventure,\" he stated.<\/p>\n
He said the government would not provide loans for the
\nfactory's construction if the company's pulpwood estates did not
\nuse reforestation funds.<\/p>\n
\"Factories such as (those belonging to) PT Riau Andalan Pulp
\nand Paper and PT Indah Kiat cannot get the loans because they
\nbuilt their timber estates with their own resources,\" he said.<\/p>\n
Riau Andalan and Indah Kiat are owned by Sukanto Tanoto and
\nEka Tjipta Wijaya, respectively.<\/p>\n
Djamaludin denied that the government was favoring Bob Hasan
\nwho has close ties with President Soeharto.<\/p>\n
\"It's only because they have the factory... If Barito Pacific
\nhas a factory, it may ask for the same facility,\" he said.<\/p>\n
But he acknowledged there were no ministerial decrees to
\nregulate loans from reforestation funds. (pwn)<\/p>",
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