Creditors accept guarantee letter for Tuban project
Saturday, November 8 2003 - 02:31 AM WIB
Speaking to reporters on Friday, Ariffi said that the he had received a letter from Japan Bank for International Corporation (JBIC) explaining its agreement with the draft of the government's guarantee letter for the financing of the project.
According to Ariffi, the letter does not state the government's readiness to financially guarantee the project but only contains a notification that state owned Pertamina will guarantee the supply of the low sulphur wax residue for the petrochemical project which would be built by PT Trans Pacific Petrochemical Indotama (TPPI).
"If the Japanese creditors do not agree the proposed guarantee letter and ask for revision, Indonesia will seek for loans from other sources," he said.
A team comprising of representatives of Pertamina, TPPI, the Indonesian Bank Restructuring Agency (IBRA) are in Tokyo to finalize term and condition for the loan agreement.
A consortium of Japanese companies led by JBIC have agreed to provide loan worth about US$400 million for the resumption of the project which was suspended following the financial crisis in early 1998. The Japanese creditors however demanded the government to guarantee the credit.
The government has, in fact, appointed Pertamina to guarantee the loan by providing low sulphur wax residue (LSWR) for four years for the project. In return, Pertamina will receive 15 percent interest in the project. But creditors consider that Pertamina's guarantee is not enough.
TPPI was previously controlled by Tirtamas Group but the business group lost most of its interest in the project following the rescheduling of its massive debts. At present the Indonesian Bank Restructuring Agency (IBRA) is majority shareholder of the company which is also partly owned by Siam Cement of Thailand and Nissho Iwai Corp. (*)