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)