Reforestation funds of Kiani not used

Reforestation funds of Kiani not used

JAKARTA (JP): PT Kiani Kertas, owned by timber magnate Mohamad
(Bob) Hasan, has nearly completed its pulp and paper plant but
has not touched the Rp 250 billion (US$108.7 million) loan from
reforestation funds.

Company president Machnan R. Kamaluddin said the company had
not yet used the money because its own funds had been sufficient.

"The loan was given as a standby facility," Machnan was quoted
by Republika as saying.

Minister of Forestry Djamaludin Suryohadikusumo has said loans
from reforestation funds should be auxiliary funds and constitute
only 20 percent of total investment in a factory.

The loan to Kiani Kertas was given based on a presidential
instruction.

Machnan said investment for the pulp and paper factory was
$1.1 billion, of which $400 million was derived from the
company's equity and the remaining $700 million from domestic
financing sources.

The company had completed 90 percent of the construction of
the pulp and paper plant, set to start commercial operation in
April. The factory was expected to produce up to 1,500 tons of
pulp a day or 500,000 tons a year.

The raw material for the Kiani Kertas factory would come from
180,000 hectares of pulpwood plantations owed by PT Tanjung Redeb
Hutani, a joint venture between Bob Hasan and state-owned PT
Inhutani I in East Kalimantan.

Machnan said total investment for the timber estate was around
$216 million, of which 35 percent came from its equity and the
rest from reforestation loans.

He said most of the company's output would be destined for
overseas markets including Japan, the United States, South Korea,
Australia and Europe. Only 10 percent of the output would enter
the domestic market.

The domestic pulp and paper market has big potential, with
paper consumption per capita being around 14 kilograms. (09)