Balongan refinery discourages petrochemical development
Wednesday, August 23 2000 - 02:30 AM WIB
Legislator Habil Marati said the operation of state-owned oil and gas firm Pertamina's Balongan oil refinery that benefited private businessmen had discouraged the development of petrochemical industry in the country.
Habil, a member of the House of Representatives' Commission IX on banking and finance, said that most of 180,000 tons of propylene produced by the Balongan refinery in West Java per annum were controlled by private businesses.
Nisso Iwai, British Petroleum (now Beyond Petroleum or BP) and Hashim Djojohadikusumo controlled the marketing of 140,000 tons of propylene - out of the 180,000 tons produced by Balongan plant. And Pertamina gets only the rest.
"With such a big control of propylene by the private sector, that discourage the development of national petrochemical industry," he said.
Besides propylene, the Balongan plant produces 125,000 barrel per day of fuels and 100,000 barrels per day of gasoline and 7,500 barrels per day of LPG.
Habil, who is also president of PT Batavindo Kridanusa, added that the Balongan plant had also caused the government to suffer a mark-up loss of $800 million, as the investment cost for Balongan should have been only $900 million and not $1.7 billion.
"With that investment ($900 million), Balongan should have used high and sophisticated technology with big capacity. So, as a petrochemical player, I dare to say that there has been almost 100 percent over investment in Balongan project," he said.
Therefore, he called on law enforcers to continue investigate the graft allegations in Balongan. (*)