TPPI construction will resume late this year, says Baihaki

TPPI construction will resume late this year, says Baihaki

Berni K. Moestafa, The Jakarta Post, Jakarta

President of the state-owned oil and gas company Pertamina,
Baihaki Hakim, said on Friday that construction of the troubled
petrochemical center PT Trans Pacific Petrochemical Indotama
(TPPI) is expected to resume at the end of this year, with
possible completion to be achieved in the middle of 2003.

Baihaki confirmed that Pertamina had agreed to participate in
the project with a 15 percent stake, and a formal deal was
expected to be signed soon.

"As soon as a deal that the bankers require has been signed,
the funds (to finance the project) can be disbursed," he told
reporters prior to a meeting with the House of Representatives
budget committee.

Construction of the East Java aromatics center came to a halt
in early 1998 in the wake of the regional economic crisis.

Some US$400 million in cash is needed to resume construction
of the remaining 40 percent of the project. Pertamina has agreed
to provide its products to help raise the needed cash via a
product swap scheme.

TPPI was originally owned by local conglomerate Tirtamas
Group, which controlled a 70 percent stake, Thai company Siam
Cement's local unit Tuban Petrochemical Pte. Ltd. with 20
percent, and the remaining 10 percent owned equally by Japan's
Nisho Iwai and Itochu.

Tirtamas was forced to transfer its stake to the Indonesian
Bank Restructuring Agency (IBRA) to help repay its debts to the
government.

IBRA, a unit of the finance ministry, has long been trying to
resolve the TPPI problem.

Foreign investors, after injecting some $700 million into the
project, have been reluctant to resume financing amid the
country's economic and social problems.

A government official said previously that Pertamina would be
treated as a senior creditor, with the first income received by
TPPI going to the energy giant.

Pertamina became involved in the TPPI project upon urging from
the government following lobbying by Japanese contractors.