Chandra Asri wins ethylene contract

JAKARTA (JP): PT Chandra Asri Petrochemical Center, the country's first olefin manufacturer, has secured a five-year contract for the sale of ethylene to PT Yasa Ganesha.

Peter F. Gontha of Chandra Asri and Freddy Gozali of Yasa Ganesha, an ethylene glycol manufacturer, signed a long-term ethylene off-take agreement here on Tuesday. The signing ceremony was witnessed by Minister of Industry Tunky Ariwibowo.

Chandra Asri released a statement yesterday revealing that the agreement requires the company to supply Yasa Ganesha with up to 24,000 metric tons of liquid ethylene each year during the next five years.

Chandra Asri has agreed to give Yasa Ganesha a discount of US$7.50 per ton from the international price in Southeast Asia.

"Ethylene glycol is one of the few intermediate plastic products which does not enjoy tariff protection and we set out to ensure the pricing structure will benefit the growth and development of this key product," Gontha said.

He noted that the price discount is aimed at protecting Yasa Ganesha from the threat of cheap imported ethylene, the main raw material for ethylene glycol which is used for the production of polyester.

"Like Yasa Ganesha's products, Chandra Asri's products are not covered by any tariff protection, and thus we are vulnerable to foreign ethylene imported at dumping prices," Gontha said.

Last year, Chandra Asri appealed to the government for tariff protection of up to 40 percent against imports. However, the proposal drew comments from the public and the government has so far not responded to the appeal.

Chandra Asri is controlled by the Napan Group, Barito Pacific Group and Bimantara Group -- all of which are believed to have strong political connections.

Chandra Asri's olefin center in Anyer, West Java, which has an annual production capacity of 550,000 metric tons of ethylene, 243,000 metric tons of propylene and 216,000 metric tons of pyrolysis gasoline, started its trial production last May. Currently the company's production facilities have been running at 80 percent of its full capacity.

In addition to Yasa Ganesha, the bulk of Chandra Asri's ethylene is consumed by its sister company PT Tri Polyta's two polyethylene resin plants, which are also located in Anyer. Its pyrolysis gasoline is exported, mainly to Japan. (rid)