Firms to cooperate on petrochemical project

Firms to cooperate on petrochemical project

TOKYO (Dow Jones): Nissho Iwai Corp, Itochu Corp, an
Indonesian firm and a Thai firm will put up a combined US$1
million every four months to cover plant maintenance costs at an
Indonesian petrochemical complex project in East Java, the Nihon
Keizai Shimbun (Nikkei) reported in its Sunday morning edition.

Construction at the complex was suspended due to the country's
economic crisis. Each of the four companies will contribute
according to their stake in the project.

The four companies are waiting for the right time to restart
construction, while keeping an eye on the economic recovery. They
will also look for new firms to replace the Indonesian firm,
which is financially weak, the Nikkei report said.

The Tirtamas group holds a 70 percent stake in the project,
while Siam Cement Public Co. holds a 20 percent stake. Nissho
Iwai and Itochu, both of Japan, each holds a 5 percent stake.

The original plan was to spend $3 billion (about Y360 billion)
to produce about 700,000 metric tons of ethylene a year as well
as other petrochemical products.

Construction was halted, however, after about 40 percent was
completed, when the economic downturn struck the region in 1997.

The four companies originally put up some $500 million to pay
for plant construction and maintenance as well as labor costs for
some 200 hundred employees. This capital has run out, forcing the
companies to boost the project's capital, the report said.