Indorayon requests two months for audit preparation

JAKARTA (JP): Publicly listed pulp and rayon company PT Inti Indorayon Utama asked the government on Monday to give it two months to prepare for an environmental audit.

Indorayon chief commissioner Palgunadi T. Setyawan said after having halted its operation for 18 months, the company would need two months to reach its optimum production level, a requisite for a thorough environmental audit.

"We're ready for an environmental audit, but requires that our plant run at its optimum production capacity," Palgunadi told reporters at a press meeting.

Palgunadi responded to a statement last week, by State Minister of Investment and State Enterprises Development, Laksamana Sukardi, outlining a plan to have an independent audit team decide whether to close or relocate Indorayon's plant.

The plant, located in the Porsea district, North Sumatra, has suspended operations since June 1998 under order of former president B.J. Habibie, pending the appointment of an independent auditor.

However, State Minister of Environment Sonny Keraf,recommended last month that the factory be shut down before the government appointed the auditor.

Palgunadi said the suspension cost the company each month $500,000 to $1 million in maintenance cost while suffering a loss in pulp revenue of $12 million per month.

"Therefore we're actually hoping for this audit, anticipating the possibility," Palgunadi said.

However, he said, only under optimum production levels can the impact of Indorayon's operation on the surrounding environment become apparent to the audit team.

He said that the company's optimum pulp production was 600 tons per day, and it would take eight weeks for the plant to reach this output level.

He said the company must first procure raw material from a nearby forest, amassing some 3,000 tons of wood, and repair the damaged road that connects the forest with the plant.

According to him, the government's plan for an audit would be the third after the state Environmental Management Agency (Bapedal) and the American auditor, Labat-Anderson, appointed by the Ministry of Industry in 1995

The administration of president Habibie ordered a third audit but no auditor was announced despite an international tender.

Asked whether Indorayon was willing to relocate its operation should the government demand, Palgunadi answered a relocation was out of question.

"The only option would be either to continue, albeit with some improvements on our factory if necessary, or close it down," he said.

He said if the audit proved Indorayon to be environmentally harmful, a relocation would only mean moving the damage to another site.

Palgunadi said foreign investors, who own 86 percent on the company's assets, supported the government's plan for an audit.

He said that generally foreign investors were sensitive to environmental issues and would not invest in companies showing problems in this area.

"If an independent audit is part of establishing investment and legal certainty, foreign investors will not object to it," he said.

The company, which started its Porsea operation in 1983, has an annual capacity of 240,000 tons of pulp and 600,000 tons of rayon.

Indorayon's largest shareholder is the Singapore based business group of Asia Pacific Resources International Holding Limited (APRIL), which holds 60.7 percent of Indorayon's shares. (03)