Construction of fertilizer plants set to resume

JAKARTA (JP): Construction of five fertilizer plants which was delayed by the economic crisis will resume this year, according to the Association of Indonesian Fertilizer Producers.

Speaking during a hearing of the House of Representatives Commission V for trade, industry and cooperatives, association chairman Suhadi said the delayed projects would be resumed in anticipation of a surge in local fertilizer demand within the next two years.

"We plan to replace our factories which have been in operation for more than 25 years to ensure continuing domestic supply," he told the legislators.

He said the five projects were a second production unit for Aceh-based PT Pupuk Iskandar Muda; a fourth production unit for the Bontang, East Kalimantan-based PT Pupuk Kaltim; East Java's PT Petrokimia Gresik's nitrogen potassium kalimum (NPK) fertilizer plant; the second unit of PT Kujang in West Java; and PT ASEAN Aceh Fertilizer's hydrogen peroxide plant.

Suhadi said Pupuk Iskandar Muda's US$310 million PIM-II project would be partly financed by loans from state owned Bank Negara Indonesia (BNI) and export credits from overseas banks.

The project began in late 1997 but was delayed due to the economic crisis.

He said the unit, which was 20.7 percent completed, would produce ammonia and urea with a capacity of 396,000 metric tons and 570,000 tons per annum, respectively.

Work on the $26.2 million Petrokimia Gresik NPK fertilizer plant, which was halted by the crisis, has also begun again, he said, adding that the project was being partly financed by loans from BNI.

Construction of the Kaltim-IV factory, with installed production capacity of 330,000 tons of ammonia and 570,000 tons of urea per annum, will commence this month, Suhadi said, adding that the $359.7 million project would be financed by export credits.

The $304.6 million Kujang-IB project will be funded with export credits and OECEF soft loans from Japan, he said, adding that the factory would have the capacity to produce 330,000 tons of ammonia and 570,000 tons of urea per annum.

"The project is still on hold until the agreement for the OECEF loans is obtained," he added.

Suhadi said the $34 million hydrogen peroxide (H202) factory in Aceh would be completed within the next three months. The factory with a production capacity of 12,000 tons annually, will transform H2O2 into a bleaching agent for the textile, pulp and paper industries and as raw material for a glass factory.

Suhadi said the association's members, comprising PT Pupuk Sriwijaya, PT Petro Kimia Gresik, PT Pupuk Kaltim, PT Pupuk Kujang, PT Asean Aceh Fertilizer and PT Pupuk Iskandar Muda, produced 5.1 million tons of urea during the first 10 months of the year.

Petro Kimia Gresik also produced 425,615 tons of ZA and 711,923 tons of SP-36 during this period.

"We exported around 25 percent of the urea to Vietnam, Thailand, Philippine, Bangladesh and Myanmar," he said.

He added that the export figure was dependent on domestic demand. "The higher the domestic need, the lower the exports." (06)