Thu, 13 Oct 1994

Construction of two new oil refineries approved

JAKARTA (JP): The government, which recently licensed four oil refineries with total investments of US$7.2 billion, has approved applications for the construction of two other refineries at a combined cost of around US$400 million.

State Minister of Investment Sanyoto Sastrowardoyo said yesterday that one of the two refineries will be located in the eastern part of the country and the other in the west.

Sanyoto, speaking at the fourth congress of the Indonesia Financial Executives Association (IFEA) at the Shangri-La hotel here, said that the refinery to be set up in the western part of the country will export its products.

The two-day congress, which ended yesterday, presented Minister of Finance Mar'ie Muhammad, Coordinating Minister for Economy and Finance Saleh Afiff and the chairman of the Stock Market Supervisory Board, Bacelius Ruru, as speakers besides Sanyoto.

Sanyoto, who is also chairman of the Investment Coordinating Board (BKPM), declined to elaborate on details of the investments and the exact sites of the planned refineries.

But, an informed source of the state oil company Pertamina told The Jakarta Post yesterday that one of the two refineries is the Kasim refinery, planned to be built in Irian Jaya with a daily processing capacity of 10,000 barrels.

The Kasim refinery will be constructed by PT Kinarti Regulonuri in cooperation with Matrix Engineering Inc. of the United States with an estimated investment of $75 million, Pertamina said.

Pertamina said that the Kasim refinery is designed to process domestic crude oil for distribution in the eastern provinces, including Irian Jaya, Maluku and provinces in Sulawesi.

BKPM has recently approved four export-oriented oil refineries, including two in East Java, to be constructed by PT Buana Ganda Perkasa with an investment of $3.5 billion and PT Asia Pacific Petroleum with an commitment of $1.09 billion. PT Sabang Oil Refinery will construct a refinery in Sabang, Aceh, with an investment of $1.58 billion and PT Indo Mudi Oil Corp. another in Pare-Pare, South Sulawesi, at a cost of $1.03 billion.

Other projects

In addition to the refineries, Sanyoto said that BKPM has also approved plans to establish a steel plant in East Kalimantan, two power generation plants in Java, one giant loudspeaker manufacturing plant in Java and 175 rubber shoe plants in various places of the country.

He told the Post that the steel plant will be constructed by a South Korean company, Kodeco Corporation, with an investment of $1.2 billion.

He declined to elaborate on the two power projects.

However, according to a source at the state electricity company PT PLN, who insisted on anonymity, the two power projects are the Paiton II coal-fired generation plant with a capacity of 1,200 megawatts (MW) in East Java and a gas-fueled power plant in Serpong, West Java, with a capacity of 400 MW.

The $2.1 billion Paiton II project will be constructed by a consortium of Germany's Siemens AG, British Power Gen and the Bimantara Group, while the $360 million Serpong plant will be sponsored by a consortium of British Gas Plc. and PT Bakrie Power Corp.

Sanyoto added that his office will also likely to approve plans on five power projects and that 60 investors have submitted letters of intent to establish the power projects.

He said the loudspeaker manufacturing plant will be set up by Rachmat Gobel Corporation, an Indonesian-Japanese joint venture.

The minister said the investment applications thus far have him feeling optimistic that foreign investment approvals will likely reach US$22 billion this year.

As of Sept. 24, approvals on foreign investment commitments had reached 318 projects valued at $19.92 billion this year, as compared to 329 projects at a total value of $8.14 billion last year, Sanyoto said.

He added that domestic investments approved by BKPM as of Sept. 24 had reached 638 projects worth Rp 45.14 trillion, as compared to 548 projects worth Rp 39.45 trillion approved last year. (fhp)