Agrintara to commence palm oil production soon

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)