Govt suspends Indorayon operation
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)