Kumenindo to set up petrochemical plant in W. Java

JAKARTA (JP): PT Kumenindo Kridanusa, a consortium of six companies headed by Fadel Muhammad, will set up a cumene-based petrochemical plant in Balong Indramayu, West Java next year, which is expected to start production in early 2000.

"Our production capacity will be 160,000 tons of cumene (raw material for making high-grade plastics) per year," Fadel Muhammad, president of the Bukaka Group, said here yesterday.

He was speaking to reporters after he and the U.S. Ambassador to Indonesia, J. Stapleton Roy, signed an agreement on a grant of US$206,000 from the U.S. government through the U.S. Trade and Development Agency to Kumenindo Kridanusa.

Fadel, who is chief commissioner of Kumenindo Kridanusa, said that the new petrochemical company will use the grant to fund a feasibility study on the petrochemical plant project.

The study, which will cost $206,000, will be conducted by M.W. Kellogg, a U.S. engineering consultant company, and is expected to be completed in August.

"Hopefully, we can start the development of the plant early next year," he said, adding that it usually takes three years to develop a mid-stream chemical industry.

He pointed out that Kumenindo is still open to foreign investor participation.

At present, it is a consortium of six companies owned by six young businessmen. Fadel's company, the Bukaka Group, is among the six. He declined to identify the other companies.

Fadel said that many foreign investors have already expressed an interest in joining.

"Several experienced petrochemical companies from the United States have already expressed an interest in joining Kumenindo in petrochemical development," he said. He refused to identify the American companies.

Asked about the total investment that will be needed for the plant, Fadel said that he could not yet give an exact amount, because he has to wait for the results of the feasibility study.

But Don Bernard, M.W. Kellogg's representative in Indonesia observed that, based on the experiences of other countries, a plant with this capacity will need an investment of between $300 million and $400 million.

Fadel said that Kumenindo will get its raw materials from local sources. "We are checking into the possibility of getting propylene from Chandra Asri," he said.

The Chandra Asri olefin center, the first in the country, is located on West Java's western coast.

Kumenindo's end products will be high-grade plastics, which are in strong demand by many industries, including the manufacturers of automobile parts. The high-grade plastics used in Indonesia are currently imported.

Asked whether the establishment of the company is related to PT Timor Putra Nasional's plan to produce a national car called "Timor", he said, "We had planned this project long before the government announced the national automobile program.

"We will sell our products to all companies that require them. This includes Timor Putra Nasional, but also others," he said. He added that his company manufactures the products for both export and the local market.

Recently, Fadel said that Hutomo Mandala Putra, the youngest son of President Soeharto and owner of Timor Putra Nasional, had agreed that the Bukaka Group would supply car components to Timor Putra, which will start its car production later this year. (13)