Pupuk Kaltim awards contracts

JAKARTA (JP): State-owned fertilizer company PT Pupuk Kalimantan Timur (Kaltim) has signed two agreements to build two amonia plants in Bontang, East Kalimantan, expected to cost US$480 million.

One of the two agreements, a joint-operation contract, was signed yesterday by PT Pupuk Kaltim and two Japanese firms, Mitsui Co. Ltd. and Tomen Corporation.

The two Japanese firms will build a plant to produce 2,000 metric tons of amonia a day. Construction of the plant is expected to cost around $280 million.

Under the contract, the plant, scheduled to open in 1999, will be jointly operated for 18 years by PT Pupuk Kaltim and the two Japanese firms.

PT Pupuk Kaltim president director Syaiful Amir said the plant would be handed over to PT Pupuk Kaltim after the 18-year contract had expired.

"If the plant makes a big profit, there is a possibility that the Japanese firms will hand the plant over to PT Pupuk Kaltim after 16 years," Syaiful said.

Agreement

The other agreement, between PT Pupuk Kaltim's pension fund foundation and Parnaraya Group, was signed several weeks ago. It is a joint venture agreement to build another amonia plant in Bontang with a daily capacity of 1,500 metric tons.

This plant, expected to cost $200 million, is scheduled to open in 1999.

The joint venture, PT Kaltim Parna Industri, is 10 percent owned by PT Pupuk Kaltim's pension fund foundation and 90 percent by Parnaraya Group.

Syaiful said the contract with the two Japanese firms was the first joint-operation scheme agreement to be signed by a domestic fertilizer company.

PT Pupuk Kaltim chose a joint-operation scheme because funds were hard to come by, he said.

Under both the agreements, PT Pupuk Kaltim will provide the land, workers and operators for the amonia plants. The partners will pay to build them.

Parnaraya Group will finance the construction of its plant with $50 million in equity and a $150 million loan from the domestic Bank Bumi Daya, said Marihad Simbolon, the president director of PT Kaltim Parna Industri.

Syaiful said 70 percent of the amonia from the Japanese firms' plant would be exported, and 30 percent would be used by PT Pupuk Kaltim to produce fertilizer. Most of the amonia from PT Kaltim Parna Industri's plant would be exported.

He said the Philippines bought most of Pupuk Kaltim's amonia.

State-owned oil company Pertamina will supply natural gas to the plants "at a price cheaper than in foreign countries, so that the amonia produced by the plants can compete on the international market," he said.

Amonia costs about $200 a metric ton on the international market, Syaiful said. (jsk)