Six new cement projects to be ready by end of 1997
JAKARTA (JP): Indonesia's annual cement production capacity of 20 million tons will increase by 12 million tons by the end of 1997 with the completion of six new projects.
Director General of Chemical Industries Sujata told a hearing with Commission VI of the House of Representatives (DPR) here yesterday that the new projects are expected to meet the growing demand for cement, which is projected to increase by 12 percent per annum.
"It might not entirely satisfy the growing demand in the future as the ideal cement production increase should be over 15 or 20 percent annually," Sujata said.
He noted that three of the six projects are established by state-owned companies. They are the fourth unit of PT Semen Tonasa in South Sulawesi, the second and third units of PT Semen Gresik in East Java.
The other three projects are to be carried out by private companies, including the optimization project of PT Indocement Tunggal Prakasa, the expansion of PT Semen Nusantara and the construction of a new factory by PT Indo Kodeco.
The production capacity of each project is 2.3 million tons per annum, except Indocement's expansion, which will have a capacity of 500,000 tons.
Sujata noted that of the six projects, two -- constructed by Semen Gresik and Indocement -- will start operating this year.
"Next week President Soeharto is scheduled to inaugurate the second unit of Semen Gresik," Sujata told the commission, which deals with the manufacturing, mining and energy industries.
Licenses
Minister of Industry Tunky Ariwibowo said in a separate hearing with the commission on Monday that the government is expecting more cement projects to be built by private sectors.
The government, in this case the Investment Coordinating Board (BKPM), has issued licenses for 23 new cement projects. However, most of the approved projects have not been accomplished.
Tunky acknowledged that financial constraints and the government-set local price references are the main barriers facing investors when building new cement factories.
The price references have been violated by almost all cement producers by selling their products far above the government-set prices.
PT Semen Padang and PT Semen Tonasa, two state companies, have unilaterally increased the sales prices of their cement to Rp 6,600 (US$3) per 40-kilogram sack, well above the local price reference of Rp 5,930. Their executives said the price references are too low as they cannot compensate with their production costs.
Meanwhile, cement prices in Jakarta yesterday soared to Rp 11,000 per sack from a range of Rp 7,000 and Rp 8,000 four days ago.
Rizal Ramli, chairman of the Advisory Group in Economics, Industry and Trade (Econit) has stated that the price increase in cement is not caused by high production costs or the imbalance between supply and demand but by oligopolistic practices by certain cement producers.
Legislator Sunaryo Hardade yesterday urged the government to control cement prices from increases.
He proposed that Commission VI conduct a coordinating meeting with related commissions in the House to discuss the uncontrolled increases of cement prices.
Commenting on Sunaryo's suggestion, Sujata noted that the government has asked cement producers to import 124,000 tons of cement and 600,000 tons of clinker -- a substance used in the production of cement -- by the end of this year.
The producers empowered to import cement are Semen Tonasa and Indocement, while those assigned to import clinker are Semen Gresik, PT Semen Nusantara and PT Semen Kupang. (rid)