TPPI gets Japanese loans worth $400m

Bloomberg, Jakarta

Sumitomo Mitsui Banking Corp. and Mitsui & Co. of Japan signed an agreement to provide a total of US$400 million in loans for Indonesia to resume a $2.3 billion oil and chemicals project in Tuban, East Java, that was halted in 1998.

Sumitomo and Mitsui will provide $200 million each for the project, called PT Trans-Pacific Petrochemical Indotama, or TPPI, Syafruddin Temenggung, chairman of the Indonesian Bank Restructuring Agency (IBRA) said.

The loan from Mitsui will be backed by the Japan Bank for International Cooperation.

The TPPI project will produce 1.6 million metric tons of kerosene and diesel, 1 million tons of light naphtha and 1 million tons of aromatics a year, he said.

"We hope to get the money in July," Temenggung told a news conference in Jakarta. "The project is 64 percent complete, and TPPI can restart the project as soon as we get the money."

Energy and Mineral Resources Minister Purnomo Yusgiantoro signed the loan agreement on Tuesday in Tokyo, Temenggung said. The project was halted after the rupiah plunged against the U.S. dollar in 1998.

It would take 21 months to complete, TPPI said last year.

TPPI is 55 percent owned by the IBRA, 15 percent by the state oil and gas company Pertamina, 20 percent by a Singapore unit of Thailand's Siam Cement Pcl., and the rest by Japan's Nissho Iwai Corp. and Itochu Corp.