$400m CP to be issued for Tuban petrochemical project

A number of multinational companies will reportedly issue commercial papers worth US$400 million in the international market to finance the stalled Tuban petrochemical project, Bisnis Indonesia reported on Tuesday.

One informed source told Bisnis that companies interested in the Tuban plant include Mitsubishi of Japan and BP of Britain.

They would issued CP after getting assurance from Pertamina that the latter would low supply sulfur waxy residue (LSWR) to Tuban plant.

"The involvement of these multinational companies will be key to get high rating for the CP, and these companies will raise funds from the international market after getting feedstock supply guarantee from Pertamina," the source said.

Nissho Iwai and Itochu, each having 5 percent stake at the project, are also interested in continuing the project.

The US$400 million fund would then be lent to PT Trans Pacific

Petrochemical Indotama (TPPI) to continue the stalled project.

"Then, Pertamina will get 15 percent stake at TPPI and also supplies of fuels from the plant," the source added.

The $2.3 billion TPPI project was initially controlled by the Tirtamas Group (70 percent) Siam Cement of Thailand (20 percent), Nissho Iwai Corp, and Itochu Corp (each having 5 percent). Because of its huge bad debt burden, the project is now controlled by the Indonesian Bank Restructuring Agency. (*)