IFC provides $509m loan for C. Sulawesi ammonia plant

By Romel S. Gurky

International Finance Corporation (IFC), a member of the World Bank Group, and PT Panca Amara Utama on Friday signed a syndication agreement, under which PT Panca Amara Utama will obtain a US$509 million long-term loan for the construction of its ammonia plant in Central Sulawesi Province. The deal will help support Indonesia?s manufacturing sector and create jobs.

IFC said in a statement that the new plant, which will cost a total of $800 million to build and have an annual capacity of 700,000 metric tons, is part of the Indonesian government?s plan to prioritize local manufacturing of the country?s natural resources into industrial products. The plant is expected to begin operation in late 2016 and create more than 1,600 direct and indirect jobs around the Banggai Regency located at the eastern end of Central Sulawesi.

The syndication is led by IFC and includes seven international banks including ANZ, HSBC, Korea Development Bank, OCBC, SMBC, Standard Chartered, and UOB. IFC will also take an equity position in PT Panca Amara Utama, a subsidiary of IDX-listed PT Surya Esa Perkasa Tbk., in the form of a subordinated loan. This is IFC?s largest greenfield project funding in Asia over the last decade.

Ammonia is used extensively as a raw material in various fertilizers. The plant will adopt a KBR patented technology that helps conserve energy while increasing outputs using the same amount of natural gas. The project will be developed by a consortium of Japan?s Toyo Engineering Corp. and Indonesia?s PT Inti Karya Persada Tehnik.

?The construction of this ammonia factory will provide high added value to both the upstream and downstream sectors of the natural gas industry,? said Panca Amara Utama Director Vinod Laroya. ?PT Panca Amara Utama?s ammonia production aims to meet demands both internationally and in Indonesia as the domestic market continues to expand as a result of the growing fertilizer industry.?

PT Panca Amara Utama will draw its natural gas from the Senoro-Toili gas field, which will be managed by the joint operating body whose members include PT Medco Energi, PT Pertamina Hulu Energi, and a joint venture of Mitsubishi Corporation & Korea Gas Corporation. The company is entitled to as much as 55 MMSCFD worth of natural gas. This is PT Surya Esa Perkasa Tbk.?s second foray into downstream gas manufacturing after the company established its liquefied petroleum gas refinery in the South Sumatra City of Palembang in 2007.

Editing by Reiner Simanjuntak