Chandra Asri imports naphtha from Kuwait
CILEGON, West Java (JP): PT Chandra Asri Petrochemical Center, the country's first olefin producer, to be inaugurated by President Soeharto today, partly depends on imports of raw materials from other countries.
"We import naphtha, the raw material for olefin production, from Kuwait because the state oil company Pertamina is still committed to long-term contracts to export this substance to Japan and South Korea," the firm's chief executive officer Peter F. Gontha told reporters who accompanied Minister of Industry Tunky Ariwibowo on his plant visit on Thursday.
Gontha said Chandra Asri buys naphtha from Kuwait at an international price of about US$180 per ton.
He did not specify how much naphtha his company imports from Kuwait but said that the company's plant needs 1.5 million tons of naphtha per annum.
Chandra Asri's plant is designed with an annual production capacity of 550,000 tons of ethylene, 243,000 tons of propylene, 300,000 tons of polyethylene and 216,000 tons of pyrolysis gasoline. The company uses the technologies of Showa Denko of Japan and two U.S. firms, Lummus Crest and Unipol, for its production processes.
At the plant's ground breaking ceremony in 1991, Pertamina's director for processing said that the state oil company guaranteed an annual supply of up to 1.8 million tons of naphtha as the feedstock for Chandra Asri.
The plant's construction was suspended in the middle of 1991 when the government decided to curb the inflow of offshore commercial loans, particularly those for companies related -- in terms of equity, production activities or sales -- to the government or state-owned companies. Its construction, however, resumed in January 1992 after the status of its ownership was changed to a foreign investment and its production activities were no longer tied with state firms.
Chandra Asri is now jointly owned by the Tokyo-based Japan Indonesia Petrochemical Investment Corporation and two Hong Kong- based foreign firms -- Siemene International Ltd. and Stallion Company Ltd. An executive said yesterday that Japan Indonesia Petrochemical Investment Corporation groups a number of Japanese and Indonesian firms.
The construction of the plant was completed in January 1995.
Last year, the company asked for tariff protection from the government against imported olefin products. The call sparked vigorous public debates involving economists, legislators, company executives and ministers. Minister of Investment/Chairman of Investment Planning Board Sanyoto Sastrowardoyo, for instance, supported the request, while Minister of Finance Mar'ie Muhammad came out against it.
Minister of Industry Tunky Ariwibowo announced Tuesday, following his meeting with President Soeharto, that the government will give neither tariff protection, nor tax incentives, nor regulatory protection to the olefin plant.
Iwao Toriumi, president of the Marubeni Corporation of Japan, which holds a 25 percent stake in Chandra Asri, said after meeting with President Soeharto yesterday that the absence of tariff protection will surely cause difficulties for the olefin company.
But, he said he was sure that the company will be able to solve the difficulties.
Since its start-up operation in April, Chandra Asri has signed contracts on the sale of its products with local companies. PT Yasa Ganesha Pura, an ethylene glycol manufacturer, for example, has signed a five-year contract for an annual off-take of 24,000 metric tons of ethylene, while PT Stryndo Mono Indonesia, a polystyrene and synthetic rubber company, has committed to buy at least 15,000 metric tons of ethylene per annum during the next five years.
Chandra Asri itself will use some 300,000 tons of its ethylene output for its integrated polyethylene resins plant, while the rest will be available for local companies.
Tunky said on Thursday that the operation of the olefin plant will help Indonesia save between US$600 million and $700 million per annum on olefin imports.(kod)