Agrintara to commence palm oil production soon

JAKARTA (JP): The construction of PTP Agrintara's palm oil refining plant on Batam island, Riau, which has been accused of fraudulent dealings, will be ready to start production by the end of September, an executive says.

Agrintara's director for production and technique, Ali Sati Siregar, was quoted yesterday by Antara as saying in Batam that the construction was now 75 percent completed.

He was confident that his company would be able to start trial production in September.

Siregar rejected recent allegations that the plant's construction had been delayed.

Executives of PT Kalpataru Semesta, the contractor for the project, said that the plant might even be finished earlier.

Kalpataru's president, Burhanudin, was optimistic that trial operation could start by the end of August and production in September.

The palm oil refining, fractionation and oleochemical plant was built starting in March, 1995, with an investment of Rp 52 billion with a designed a daily capacity of 1,000 tons of crude palm oil (CPO).

Seventy-six percent of the plant's production will be made into olein (for the production of cooking oil), 21 percent into sterin (for soap and margarine) and 3 percent into palm fatty acid (for alcohol).

About 80 percent of the plant's olein production will be exported and the remaining 20 percent sold domestically.

Agrintara was recently accused by several agricultural officials and organizations of making questionable deals with two separate contractors -- PT Mestika Karunia and PT Kalpataru Semesta. Both companies are controlled by Burhanudin, who is reportedly a close associate of agriculture minister Sjarifudin Baharsjah.

The allegations suggested that PTP Agrintara might have lost billions of rupiah due to delays in the completion of its rubber goods and palm oil refining plants.

The costs incurred for the two projects -- close to Rp 90 billion (US$38.6 million) -- were said to be way above budget.

The rubber goods plant in Purwakarta, West Java, was inaugurated early last month, about five months behind schedule and Rp 7.28 billion over budget. The project was constructed by Mestika Karunia.

The palm oil refining plant on Batam island, contracted to Kalpataru, overshot its budget by Rp 2.2 billion.

PT Mitra Lestari Alam, the construction management supervisor hired by Agrintara for the palm oil plant project, reported in February that the completion of the project would be at least seven months behind the March 7, 1996, schedule. By last November, only 6.4 percent of the 85 percent target had been completed.

Agrintara was set up in December 1992 by the 26 state-owned plantations companies (before they were merged into 14 corporations in March) as a holding company for developing downstream industrial activities.

In February 1993, Minister of Finance Mar'ie Muhammad granted Agrintara quasi-private company status to provide it with management autonomy and operational flexibility. The status freed it from the arduous procurement procedures imposed on state companies.

The ruling has led to a difference in opinion as to which audit agency is authorized to check the company. (pwn)