Pare-pare to build oil refinery in South Sulawesi
JAKARTA (JP): Pare-pare Refining Corporation, a subsidiary of Meganusa Holding Corporation, is to build an oil refinery in Pinrang, near the South Sulawesi city of Pare-pare, with an investment of Rp 10.2 trillion (US$4.42 billion).
"We'll start constructing the refinery in December. Hopefully, we can complete the construction in 42 months and start our commercial operations with an initial processing capacity of 130,000 barrels per day," Sigit H. Prabowo, the executive director of Pare-pare Refining Corporation, told a press conference yesterday.
He pointed out that after eight months of operation, the company will increase the capacity to 280,000 barrels per day.
"We've already got a license from the Ministry of Mines and Energy and from BKPM (the Investment Coordinating Board)," he said.
Sigit said that his company, which is owned by Ron Grim of the U.S. oil company Mobil Oil and Stephen Hock-Wen Chong of Singapore, is now considering a number of financing alternatives proposed by a number of European banks. He refused to name the banks.
According to Sigit, his company, the U.S. firm Bechtel USA and PT Soilens have completed a preliminary geotechnical survey and a feasibility study of the planned refinery area.
Hock-wen Chong said that Meganusa will export all of the refinery products, to the Philippines, Singapore, Cambodia, Vietnam and South America.
He said his company has already signed agreements with two trading companies to market the oil products. But he refused to identify the companies.
Meganusa is one of the 12 foreign investors who got licenses in 1994 from BKPM to build oil refineries in Indonesia. But they have delayed the projects owing to uncertainty in the sales of their planned oil products on the domestic market.
The board's chairman, Sanyoto Sastrowardoyo, said recently that the investors were waiting for a change in the law related to the sales of oil products in the country before going ahead with their projects.
According to the existing law, the state-owned oil company Pertamina is the only company allowed to process, distribute and market oil products in the country.
Currently, Indonesia has six refineries -- in Pangkalan Brandan, Dumai and Plaju on Sumatra; Cilacap and Balongan on Java; and Balikpapan in East Kalimantan -- with a total processing capacity of 982,500 barrels per day.
Cement plant
Sigit also said yesterday that Meganusa, through its subsidiary Himkonam Pertiwi Corporation, has set up a joint venture company with the Himpurna Group to build a cement plant in Purwodadi, Central Java.
"We'll start the construction of the plant early next year and it will be completed in 36 months," he told the press.
Sigit said that initially the plant will have a production capacity of 1.5 million tons per year with an investment of $300 million.
"Later, we'll expand the capacity by two million tons per year with a total investment of $400 million," he said.
The joint venture is 80 percent owned by Himkonam and 20 percent by Himpurna.
According to Sigit, for the construction of the cement plant his company will also get loans from a number of foreign banks. But he refused to identify the banks or the amount they are going to provide.
He said that his firm has secured a source of raw materials for the cement plant in Tawang Raharjo, about 20 kilometers away from Purwodadi.
"We will construct a conveyor belt linking our raw material mine in Tawang Raharjo and our plant in Purwodadi. But because the conveyor will go through the land of the state-owned forestry company Perhutani, we're still negotiating on the land clearance," he said.
He said that his company will also construct a 70-km railway to link the cement plant in Purwodadi and the Central Java capital city of Semarang.
"That way we can easily transport our cement products to our buyers," he said, adding that all of the company's cement products will be sold on the domestic market. (13)