Government to allocate Bontang refinery project to private investor

The government plans to allocate the US$14 billion Bontang refinery project in East Kalimantan to private investor in a bid to accelerate the development of the badly-needed facility, Kontan reported on Friday.

The paper quoted Vice Minister of Energy and Mineral Resources Arcandra Tahar as saying that under the current plan, which is a public private partnership scheme, where state-owned oil and firm PT Pertamina will team up with private investors in the project, the process will take a rather longer time to complete due to lengthy bureaucracy procedure. ?We need a (new) refinery as soon as possible,? he said, pointing out that existing domestic refineries only have effective capacity of 800,000 bpd, while domestic fuel consumption stands at 1.6 million bpd.

He added that the government fears that Pertamina?s financing capacity will be quite limited as it has been assigned to develop the Tuban refinery in East Java in partnership with Russia?s Rosneft.

?The President?s (Joko Widodo) instruction is that if the bureaucratic line is long, then the private investors are welcome to enter by introducing a new scheme,? he said, adding that many investors have expressed interest in the Bontang refinery project, which will have capacity of 300,000 bpd.

Pertamina Director for Processing and Perochemical Megaproject, Rachmad Hardadi said that the company is capable of developing the Bontang refinery project, and can complete it sooner.

He previously said that selection of a partner for the project is targeted to be completed end of next year, and construction to start in 2019 in the hope that it can be completed in 2023. (*)