Indorayon must operate for auditing: Rahardi

JAKARTA (JP): Minister of Industry and Trade Rahardi Ramelan said on Tuesday that the troubled pulp and rayon producer PT Inti Indorayon Utama must run its mill in Porsea, North Sumatra, to enable the independent audit team to evaluate its operations.

"When it's time, like it or not, (the mill) must be in operation because in order to evaluate the mill's production process, the machinery must be running," Rahardi told a media conference.

The Porsea mill, located near the picturesque Lake Toba, has been the target of massive demonstrations since early July, when it was forced to stop production by local protesters who alleged that the plant had damaged the environment.

The mill began operating again late last month because in order to be audited it has to have been running for five weeks.

This incurred the wrath of local residents, who want the plant to be closed without waiting for the results of the audit. Anger then spilled over into rioting in which cars, houses and commercial buildings belonging to the company were damaged or set on fire.

The publicly-listed Indorayon last weekend urged the government to protect its operations, its workers and property while its fate is being decided by the auditing team.

It also urged the protesters to give the team a chance to complete its work.

Rahardi said the government had picked an auditor from a number of local and foreign surveying companies which bid for the job.

However, he declined to name the winner, saying that he had to first discuss the matter with State Minister of Environment Panangian Siregar and Minister of Forestry and Plantations Muslimin Nasution.

Five firms which entered the competition were Sandwell from Canada, Jakopoyry from Finland, Klocker from Germany, and the local state-owned PT Sucofindo and PT Surveyor Indonesia.

The team will conduct an extensive audit of everything "related to the existence of Indorayon", he said.

Rahardi said the auditor would also look into the feasibility studies conducted by Indorayon before it was given a license to operate the mill in the area.

He said the independent team would ascertain whether Indorayon had fulfilled all the conditions of its license agreement with the government and would devise new license requirements for Indorayon which draw upon the demands of local residents.

The team, which is expected to complete its work within three months, will provide a recommendation to the government, which Indorayon will then be given a chance to challenge.

Indorayon is listed on the Jakarta and Surabaya Stock Exchanges. It is 62 percent owned by the Singapore-registered Asia Pacific Resources International Holdings Ltd., which is listed on the New York Stock Exchange.

The other 38 percent of Indorayon is owned by the investing public, cooperatives and a number of shareholders from Finland.

Indorayon's mills have an annual production capacity of 240,000 metric tons of hardwood pulp and 60,000 tons of rayon fiber. Before the suspension, the company exported 70 percent of its output. (das)