Government asked not to guarantee Tuban project
Friday, October 3 2003 - 03:26 AM WIB
The secretary of the committee Lukita Dinarsyah told Bisnis Indonesia on Thursday that the revision of the regulation should be made for a general purpose, not because of the need of certain parties.
In the case of the Tuban project, Lukita said that the government can maximally provide a statement that it would back Pertamina's plan to supply raw material in the form of low sulphur wax residue (LSWR) as the guarantee for the loans of about US$400 million to be raised to finance for the resumption of the petrochemical project.
Sumitomo Mitsui Bank Corporation and Nippon Export Insurance (Nexi) which would provide the loan for the project has asked an additional guarantee from the government as the condition for the disbursement of the loan. But if the government agrees to provide the guarantee it would be against the presidential decree No: 59/1972 which prohibits state firms to act to a guarantor of a commercial project.
Meanwhile Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that his office had never received a proposal to issue "a government letter" as the guarantee for the project.
"I have never received such a proposal. Moreover, the guarantee should come from technical ministry (ministry of finance) not from the ministry of energy and mineral resources," he said.
The East Java-based petrochemical project which was halted during the peak of the country's worst ever economic crisis in 1999. The project 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) and Pertamina are the majority shareholders of the project which is also partly owned by Siam Cement of Thailand and Nissho Iwai Corp. (*)