Pertamina allowed to seek $1 billion in offshore borrowing

JAKARTA (JP): The government has approved the state oil corporation Pertamina's plan to borrow US$1 billion from foreign banks for the development of oil refineries in Central Java and East Kalimantan.

"The Coordinating Team for the Management of Offshore Commercial Loans approved Pertamina's proposal to raise new offshore borrowing recently after making an intensive study of the company's refinery development plan," Pertamina's director for processing, G.J. Atihuta, told reporters at the break of a one-day seminar on oil and gas yesterday.

Atihuta, representing Pertamina's president Faisal Abda'oe with a keynote speech at the seminar, said that the credits will be used to finance to speed up pro two oil refineries in Cilacap, Central Java up to production capacity, and to modify two refineries in Balikpapan, East Kalimantan.

"The debottlenecking of the Cilacap refineries, which will include procurement of a new technology, will enable them to process crude oil at a much faster speed, thereby increasing their combined processing capacity to 400,000 barrels per day (bpd) from 300,000 bpd at present," he said.

One of the Cilacap refineries can process 200,000 bpd and refines Indonesian crude while the other, with a capacity of 100,000 bpd, processes crude oil imported from the Middle East.

Atihuta said the up-grading and modification of the two refineries in Balikpapan will increase their combined capacity from 265,000 bpd to 350,000 bpd and enable them to process crude oil from the Middle East.

Start

"We will start the projects this year," Atihuta said.

He declined to specify the foreign countries which will provide the loans for the projects.

Atihuta said the projects will cost $500 million each.

"Thanks to the government for its recommendation of our planned borrowing, especially amid its efforts to tighten the expansion of the country's foreign debt," he said.

Coordinating Minister for Economy and Finance Saleh Afiff warned early last month that Indonesia's offshore debts had reached $90 billion, $36 billion of which was owed by the private sector and the remaining $54 billion by the government.

He urged companies to restrain themselves from new borrowing, in order not to break the "psychological" barrier of $100 billion.

He said breaking the barrier would threaten Indonesia's current accounts, he cautioned.

The government has set a ceiling on offshore commercial loans at $6.5 billion through next fiscal year. Annual ceilings on foreign loans for the central bank, state banks, and private banks are set at $500 million, $1 billion and $500 million, respectively.

Under the ceiling, state companies are allowed to borrow up to $1.4 billion in the current fiscal year and up to $1.6 billion next fiscal year, while private firms may borrow up to $2.8 billion this fiscal year and up to $2.9 billion next fiscal year. (fhp)