Loan disbursement for Tuban project begins in May

A consortium of Japanese creditors including Japan Bank for International Cooperation (JBIC), Nippon Export Insurance and Mitsui Corp will soon begin the disbursement of some US$400 million in loan for PT Trans Pacific Petrochemical Indotama’s (TPPI) petrochemical project in Tuban, East Java.

TPPI’s commissioner Muchsin Bahar said in Jakarta over the weekend that in the first stage, the creditors would disburse between $15 million and $20 million of the total loan on May 26, this year.

The loan would be used to finance the resumption of the petrochemical project, which was suspended due to the financial crisis which severely hit Indonesia beginning late 1997, Muchsin told Koran Tempo daily. He said that the resumption of the project would last about two years.

Pertamina has been appointed by the government to guarantee the loans for the resumption of the Tuban project. As the guarantor, Pertamina has agreed to provide low sulphur wax residue (LSWR) for four years for the project. In return, Pertamina will receive a 15 percent interest in the project.

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. (*)