Financing ready for Tuban petrochemical project: Report

Construction of Indonesia's giant Tuban petrochemical project, stalled during the Asian financial crisis, will resume this month when it receives US$400 million in syndicated loans, a banking source was quoted by Reuters as saying.

The billion-dollar project is one of several large national projects in Indonesia, including power plants, that are being restructured after suffering financial problems in the 1997/1998 regional economic crisis.

"This US$400 million will be drawn down in the middle of April," the source, who asked not to be identified, told Reuters.

"It will take 22 months to finish constructing the plant. It will start the moment the draw-down happens."

Indonesia's state oil company Pertamina has a 15 percent stake in the project, which was 64 percent completed in 1998 when equity dried up and debt financing was cancelled, the source close to the financing plan said.

Japan's Itochu Corp is also a sponsor for the project in East Java, which had been originally scheduled to come onstream in mid-1999.

Half of the eight-year $400 million loans were arranged by Sumitomo Mitsui Banking Corp , while the other half would come from Mitsui & Co in a programme supported by the Japan Bank For International Co-operation, he said.

Project finance volume in Asia, including bank loans and bonds, has recovered following a fall between 1997 and 1999, when banks cut lending, downsized operations or left the region as many projects went sour during the financial crisis.

Before the project was suspended, it was slated to have a capacity to produce three million tonnes per year of olefins, aromatics and other products for domestic use. It would be Indonesia's first integrated olefins and aromatics facility. Other oil products include light naphtha.

The plant had been projected to use 98,000 barrels per stream day of condensate as feedstock.(*)