A'an Suryana, The Jakarta Post, Jakarta

A'an Suryana, The Jakarta Post, Jakarta

A group of financial institutions signed here on Tuesday an
agreement with state oil and gas company Pertamina to provide
loans for the company's US$275 million unleaded gasoline projects
in Balongan, West Java, and Cilacap, Central Java.

The lenders will provide a $200 million loan, while Pertamina
will cover the remaining $75 million. The Balongan and Cilacap
refineries are valued at $191 million and $84 million
respectively, according to Pertamina.

The loan, which carries an annual interest rate of 275 basis
points above the London Interbank Offered Rate during its 3.5-
year maturity period, was arranged by Sumitomo Mitsui Financial
Group Inc.

The lenders include Japan Bank for International Cooperation,
Credit Lyonnais S.A., ING Bank N.V., UFJ Bank and Bank of Tokyo-
Mitsubishi.

"The signing of the agreement marks an important step in the
development of the unleaded gasoline facilities, which are
expected to start operation by 2005," said Pertamina president
Baihaki Hakim.

Pertamina has appointed PT Rekayasa Industri and Japan's Toyo
Engineering Corp. to modify the Balongan refinery and is in the
middle of selecting a contractor for the Cilacap project.

The development of both plants is aimed at supporting the
government's Blue Sky program, which is meant to reduce air
pollution caused by leaded gasoline.

Pertamina started selling unleaded gasoline in July 2001 in
several areas in the country, including Jakarta, Cirebon in West
Java, and Bali. But Pertamina either imports the gasoline or
produces it here with some imported raw materials.

By developing the two unleaded gasoline plants, Pertamina
expects to reduce costs for the supply of such gasoline.

"It is expected that all gasoline in Indonesia will be lead-
free by the middle of 2006," Baihaki said.