Japan creditors to extend loan for RI plant

Japan creditors to extend loan for RI plant

Agence France Presse, Tabanan, Innesia

Japanese creditors are expected to approve by year-end a US$400 million loan to complete construction of a long-delayed Indonesian petrochemical plant, the group behind the project said Wednesday.

The funding will enable PT Trans Pacific Petrochemical Indotama, a unit of state-run PT Tuban Petrochemical Industries (Tuban Petro), to complete the plant at Tuban in East Java.

The project, which is expected to start production by 2004-05, has been delayed due to a sharp fall in investor appetite following the Asian financial crisis which began in 1997.

"The project has been 70 percent completed so this funding is only for the remaining 30 percent," Tuban Petro president Yap Tjay Soen told a press conference at the Indonesian government's investor forum on Bali island.

Trans Pacific finance director Mir Taparia said negotiations with two creditors -- the Japan Bank for International Cooperation and the Nippon Export Insurance Agency -- have been progressing well.

"Negotiations are at the G-to-G (government-to-government) stage," he said. "They strongly support the project."

Soen said that once funding is available, Trans Pacific will resume construction which is expected to take two years to finish.

The plant will have installed capacity of 3.6 million tons a year -- one million of aromatic chemicals, one million of light naphtha, and 1.6 million of kerosene and diesel.

"Trans Pacific will be the first company other than (state- owned oil and gas firm) Pertamina that will produce fuel," Soen said.

The plant will buy the raw materials for kerosene and diesel oil from Pertamina's oilfield at Cepu in East Java.

Surplus cashflow from the project will be used for debt repayment in the first two years of operation, Soen said.

The Indonesian Bank Restructuring Agency acquired 70 percent of Tuban Petro through the restructuring of Rp 4.1 trillion (now $445.6 million) in debt owed by the former owner, the Tirtamas Group.