UIC's olefin unit to start production later this year

JAKARTA (JP): The publicly-listed PT Unggul Indah Corporation (UIC), the country's sole alkylbenzene producer, said yesterday that it will complete the construction of its PACOL (paraffin convert to olefin) unit in October.

"The operation of the $60 million PACOL unit, which has a production capacity of 120,000 tons per annum, will enable us to produce linear alkylbenzene at more competitive prices since normal paraffin is cheaper than olefin," said UIC president Hartono Gunawan.

Normal paraffin is a substitute raw material for alpha and normal olefin in the production of linear alkylbenzene.

Gunawan, who was elected president last year replacing Johannes Kotjo, said that the use of paraffin as raw material will enable the company to reduce its production costs by 10 percent.

"Paraffin is now sold at only US$400 per ton compared to olefin which is sold at $700," Gunawan said.

"It also means that we will enter the upstream petrochemical industry," he added.

The PACOL unit, which is being constructed by Samsung Engineering of South Korea, will use the processing technology from Universal Oil Process, a U.S.-Japan joint venture company, under a licensing agreement signed in 1994.

UIC, according to Gunawan, will also begin the construction of its third alkylbenzene production plant this year. The company is now operating two alkylbenzene plants in Cilegon, West Java, with a combined production capacity of 150,000 tons per annum.

"The new plant is expected to start commercial production later next year and will increase our total capacity by 40 percent to 210,000 tons per annum," Gunawan added.

The construction of the PACOL unit and the new alkylbenzene plant, according to Gunawan, is partially financed by $120 million in syndicated loans raised by the company last August.

Gunawan also said that the company booked a 12 percent increase in its total consolidated net sales to Rp 317 billion last year over 1994.

"It was attributable to higher sales of linear alkylbenzene (which was up by 7 percent), branch alkylbenzene (8 percent) and sodium tripoly phosphate (24 percent)," he said.

"Our net profit, however, rose be only 7 percent to Rp 32 billion due to a change in accounting standards," he added.

UIC's shareholders yesterday approved the management's proposal to pay Rp 150 per share dividend for the 1995 book year, totaling Rp 21.7 billion or 65 percent of the company's net profit. (08)