Decision on refinery site defended

JAKARTA (JP): East Java Governor Basofi Soedirman defended yesterday his recent recommendation to convert 1,000 hectares of farm land into an oil refinery site.

"We have calculated the profits and losses that might result from the land conversion, and we have concluded that the profits outweigh the losses," he said in Surabaya yesterday.

He was quoted by Antara as saying that developing the oil refinery would be more profitable than maintaining its agricultural function.

"The project can also employ local people. But those not interested in being employed will be relocated to another agricultural area," he said.

He said that his office will seek a larger area in other districts to replace the 700 ha of rice fields and 300 ha of coastal fish ponds in the Situbondo regency in the southern part of East Java, which will be sacrificed for the refinery project.

Basofi was commenting on the remarks made on Monday by State Minister of Agrarian Affairs Soni Harsono, who, after he met with President Soeharto, said that irrigated rice fields could no longer be converted for other purposes.

Soni quoted Soeharto as saying that rice fields can be sold but their functions must not be altered. They have to be preserved at all costs.

"The President has instructed the office of the state minister of agrarian affairs to preserve agricultural areas," said Soni, who is also the chairman of the National Land Agency.

PT Gigaraya International, together with Japanese and Saudi Arabian investors, have set up a consortium called PT Paras Refining Company to build the oil refinery with an investment of US$3.1 billion.

Agus Kartasasmita, a Gigaraya International director, was quoted by Antara as saying that development of the oil project will start early next year and will begin production in 2000.

To feed the refinery, the new company will import 150,000 barrels of crude oil per day from the Middle East.

"Our annual production will be 2.3 million tons of gasoline, three million tons of diesel fuel, 2.3 million tons of kerosene, 146,000 tons of coke and 150,000 tons of sulfur," Soni said.

He said that the conversion may have been made possible due to collusion between provincial administration officials and investors in the oil project.

"Or it could be because provincial National Land Agency officials did not know the status of the agricultural area. We, therefore, will check it," he said.(13)