Sat, 06 Aug 1994

Humpuss to establish $330m methanol plant

JAKARTA (JP): A subsidiary of Humpuss Group yesterday assigned Lurgi Oil-Gas-Chemie Gmbh of Germany to construct a methanol plant worth US$330 million in Bontang, East Kalimantan, with an annual capacity of 660,000 tons.

The project will be the first private methanol plant and the second producer of such a downstream chemical product in Indonesia after the first one established by the state oil company Pertamina in 1983.

Abdul Wahab, president of the Humpuss subsidiary, PT Kaltim Methanol Industri (KMI), told reporters after signing the contract agreement with Lurgi that the construction of the methanol plant will begin later this year and will be completed within 28 months.

Wahab said the plant is expected to start production at the beginning of 1997.

The construction of the plant, originally planned by KMI in cooperation with a state-owned fertilizer company, PT Pupuk Kaltim, was delayed from its original schedule at the end of 1991, following the issuance of Presidential Decree No. 39/1991, which prevents state-owned companies or joint ventures involving state-owned companies from accruing large amounts of offshore loans. Pupuk Kaltim then withdrew its participation in the project.

KMI decided to resume the project by signing a memorandum of understanding with IKB Deutsche Industriebank AG of Germany and Nissho Iwai Corporation of Japan on its financing on Sept. 16, 1993.

Wahab said yesterday that 80 percent of the costs for the project's construction will be financed by an offshore loan from IKB Deutsche Industriebank AG and Nissho Iwai Corporation and the remaining 20 percent by his company's equity.

He said the plant will be designed to produce 2,000 tons of methanol per day, or a total of 660,000 tons per year, assuming that there will be 330 working days a year.

Sixty percent of the plant's production will be exported. The remaining 40 percent will be sold domestically.

Director General of Chemical Industries Sujata said the demand for methanol in Indonesia is 460,000 tons per year, while the supply from Pertamina is less than 330,000 tons. (02)