Japan and Singapore help finance Pertamina?s Blue Sky Project

Japan and Singapore have agreed to provide financial assistance totaling US$300 million to support state owned oil and gas company Pertamina?s Blue Sky Program, a project for the development of unleaded fuel production at the country?s several refinery plants including the Balongan and Cilacap refinery plants, Koran Tempo reported on Saturday.

Japan, through Japan Bank for International Cooperation (JBIC) and Mitsui Corp will provide about US$200 million, while Singapore through a consortium of banks led by BNP Paribas will provide another US$100 million.

Muchsin Bahar, the director for downstream operations of Pertamina said that the loan will be paid with low sulfur wax residue of 18,000 barrels per day for six-year period. According to him, the production of unleaded fuel would be in the first stage carried out at the Balongan refinery plant in West Java and then in the Cilacap refinery plant in Central Java. The unleaded fuel will be distributed in Jakarta, Cirebon, the northern coastal area in Java and Bali.

The project started in 2001 but it was stalled due the lack of financing although Pertamina had spent about US$75 million from its internal funds for the project.

Muchsin said that the swap arrangement would not cause a problem to Pertamina because the volume of the low sulfur wax residue which will be supplied by Pertamina as the payment of the loan would be adjusted to the value of the loan being disbursed by the financiers. (*)