Pertamina to receive loans for Tuban petrochemical project

State oil and gas company Pertamina will receive loans totaling US$400 million from a Japanese consortium led by Sumitomo Mitsui Banking Corporation (SMBC) to finance the Trans Pacific Petrochemical Indonesia (TPPI) project in Tuban regency in East Java.

"This loan will hopefully speed up the construction of TPPI project which will begin early 2004," Pertamina president Ariffi Nawawi said Wednesday during the commemoration of Pertamina's 46th anniversary.

In June, the Japanese consortium agreed to provide a total of $400 million loans in two stages to Pertamina so as to enable the latter to reactivate the petrochemical project. The consortium consists of SMBC, Nippon Export Investment Insurance (NEXI), Japan Bank for International Cooperation (JBIC), and Mitsui Corp.

The Tuban project, originally owned by the Tirtamas Group and suspended in 1998 after severe economic crisis hit Indonesia, was transferred in 1998 to the Indonesian Bank Restructuring Agency (BPPN) after the conglomerate failed to repay Rp5.4 trillion (US$=Rp8,500) in bank loans. BPPN then transferred 15-percent ownership in the project to Pertamina.

The project, among others, would produce aromatic so that the country would save some US$1 billion per annum, as it would not necessary to import the product anymore. (godang)