Pertamina gets US$1b loan commitments from banks<\/p>\n
Moch. N. Kurniawan, The Jakarta Post, Jakarta<\/p>\n
State oil and gas firm Pertamina said on Thursday that it had
\nreceived initial commitments from three U.S. and Japanese
\nfinancial institutions to provide US$1 billion in commercial
\nloans to finance its expansion and exploration projects.<\/p>\n
Pertamina president Baihaki Hakim said the loans were needed
\nafter the House of Representatives decided earlier to force the
\ncompany to pay over 50 percent of its earnings to the treasury,
\nup from the current 10 percent, starting next year.<\/p>\n
\"We hope we will reach a deal with them soon,\" he told
\nreporters prior to a meeting with the House of Representatives'
\nCommission VIII for science, technology and the environment.<\/p>\n
He added that the government had agreed with the company's
\nplan to take out commercial loans.<\/p>\n
But he declined to provide the names of the lending
\ninstitutions or the timetable for reaching final agreements.<\/p>\n
The government officially agreed on Wednesday with the House's
\ndecision to raise the government's dividend from Pertamina.<\/p>\n
Pertamina has been banned by the government from seeking
\ncommercial loans for nearly thirty years following a scandal in
\nthe mid 1970s when it was headed by founding president Ibnu
\nSutowo.<\/p>\n
Pertamina borrowed some US$10.5 billion to finance a fleet of
\noil tankers, but was unable to repay the loans. The scandal
\npushed the company to the brink of bankruptcy.<\/p>\n
Baihaki said that the loans would be used to finance various
\nprojects, particularly those in the upstream sector, such as the
\nacquisition of Spanish-Argentinean firm Repsol-YPF for $270
\nmillion.<\/p>\n
Pertamina would also seek loans from other financial
\ninstitutions although this wouldn't be easy, he added.<\/p>\n
Baihaki further said that Pertamina might have to shelve other
\nexpansion projects requiring billions of dollars in upstream and
\ndownstream sectors between 2002 and 2006 if it was unable to come
\nup with enough funding.<\/p>\n
According to Baihaki, among the projects that may be delayed
\nare the $90-million acquisition of a geothermal power plant in
\nDieng, Central Java, and the $73-million takeover of the Wayang
\nWindu power plant in West Java.<\/p>\n
The company would also change the procurement of 38 fuel
\ntankers worth $805 million into a leasing mechanism, he said.<\/p>\n
Pertamina would evaluate other projects over the next two
\nweeks, he added.<\/p>\n
\"But we remain committed to continuing the expansion of three
\nprojects: investing in ExxonMobil Cepu in Central Java, taking
\nover the Coastal Plain Pekanbaru block in Riau and expanding the
\nLangit Biru projects in West Java,\" Baihaki said.<\/p>\n
Pertamina will invest $92 million in the Cepu block owned by
\nAmerican firm ExxonMobil, $115 million taking over the CPP block
\noperated by Caltex Pacific Indonesia, and $245 million for the
\nCilacap and Balongan Langit Biru projects.<\/p>\n
Separately, energy analyst Kurtibi hailed the government's
\ndecision to allow Pertamina to seek commercial loans, saying that
\nsuch a move should have been made a long time ago.<\/p>\n
\"The move will help Pertamina expand,\" he said.<\/p>\n
He added that the government should also revoke other
\nregulations which limited Pertamina's expansion programs, but he
\nfailed to provide details.<\/p>\n
Elsewhere, Baihaki said that Pertamina also planned to hedge
\noil prices at $22 per barrel in order to minimize the risk of a
\npossible fall in oil prices next year.<\/p>\n
The firm had sought funds from two U.S-based institutions,
\nBank of America and Merryl Linch, and Germany-based Deutsche Bank
\nto finance crude oil hedging, he said.<\/p>\n
\"It's still a pilot project. We must be careful with this
\nplan, otherwise we might suffer unexpected losses,\" he said.<\/p>\n
He added that Pertamina would start implementing the hedging
\nplan in January 2002.<\/p>",
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