Govt suspends Indorayon operation
JAKARTA (JP): President B.J. Habibie decided to temporarily suspend the operation of rayon and pulp producer PT Inti Indorayon Utama near Lake Toba, North Sumatra, in an attempt to calm tension and allow an evaluation team time to do its work, North Sumatra Governor T. Rizal Nurdin said on Friday.
Habibie also ordered a private foundation, Yayasan Pencinta Danau Toba (Lake Toba Lovers Foundation), and an independent audit team comprising environmental and health experts to evaluate the impact of Indorayon's operations on the local environment, Rizal said.
"This company is a troublemaker. Therefore its operation was temporarily suspended," the governor said after he and executives of the foundation met with the President.
During the meeting, Habibie was accompanied by seven ministers: Minister of Home Affairs Syarwan Hamid, State Minister of Environment Panangian Siregar, Minister of Tourism, Arts and Culture Marzuki Usman, Minister of Public Works Bambang Sumadhijo, Minister of Investment Hamzah Haz, Minister of Mines and Energy Kuntoro Mangkusubroto and Minister of Defense and Security/Armed Forces Commander General Wiranto.
The foundation's delegation was led by its executive chairman, Midian Sirait.
"We were given two weeks to prepare recommendations, and after that a more thorough evaluation will be conducted before the President makes his decision," said the governor.
The governor acknowledged Habibie's decision also was influenced by the ongoing demand by local people to close down Indorayon's mills.
"The mills will remain closed until the foundation recommends they be permanently closed, converted into a pollution free factory or relocated to another place," said Sirait.
A spokesman for Indorayon told The Jakarta Post on Friday that the closure order was not necessary because the mills had not operated since January because of civil disorder and disruptions of deliveries of materials and supplies to the mills.
Rizani Usman said the mills resumed operation in November after being closed for four months because of continuous demonstrations by local people since July.
"The mills were reopened at the order of the government to allow for an independent audit team to evaluate the company's operation," Rizani added.
But the mills were closed again in January before the audit team began its work, he said.
Separately, Indorayon's director of finance, David Pile, was quoted by Dow Jones as saying on Friday that the company might default on the interest and principal payments of its US$150 million in Eurobonds due in 2001.
The pulp and rayon producer, dogged by persistent troubles since last July, was again hit by a violent protest on Friday when hundreds of demonstrators threw rocks at trucks hauling materials to its mills.
Police were forced to fire warning shots to disperse hundreds of people who have accused the company of damaging the environment and polluting Lake Toba.
Earlier on Thursday, two bodies, believed to be those of Indorayon employees, were pulled from Asahan River. Another body was found on Friday. The three were Indorayon workers who were reported missing several days ago.
A local police spokesman said it was suspected the disappearance of the three men was related to their affiliation with Indorayon.
The $600-million Indorayon mills have a capacity of 240,000 metric tons of pulp and 60,000 tons of rayon fiber, mostly produced for the international market.
Indorayon is listed on the Jakarta Stock Exchange and has American depository receipts.
Last December, Singapore-registered and U.S.-listed Asia Pacific Resources International Holdings Ltd. decided to sever its ties with Indorayon by selling its 62 percent stake in the company to the founding shareholders, the Tanoto family of North Sumatra. (prb/21)