Pertamina vows to continue Tuban project
Wednesday, October 8 2003 - 04:35 AM WIB
The government is yet to issue a guarantee letter for the project. The creditors of the project want a guarantee for their investment from the government.
“There is no reason to delay the realization of the Tuban project. We have reached an agreement with the creditors and the coordinating minister is still considering to issue a guarantee letter,” Pertamina president Ariffi Nawawi told Investor on Tuesday in Jakarta.
Pertamina’s decision to continue the project is based on the market potential especially oil-based fuel in East Java. The consumption of gasoline in East Java is very huge, said Ariffi.
“East Java’s captive market is big and has huge potential. Since there is no refinery there, it (Tuban project) will be very beneficial to Pertamina, he said.
The project, which is funded by Sumitomo Bank Mitsui Corporation (SBMC) and Japan Bank for International Cooperation (JBIC), is almost finished. Presently, it has entered into the phase of finishing the building of petrochemical storage tank, which will store the products including middle distillate (crude diesel and kerosene) and light naphta (premium gasoline), Ariffi explained.
“It will be pity, if the project, which is almost finished, is cancelled,” he said.
Ariffi stated that the government also wanted to continue the project because the petrochemical products of Tuban plant would meet the demand of the domestic market.
Indonesia has been importing annually US$1 billion worth of petrochemical products from countries like Thailand and China through Pertamina.
Moreover, according to Ariffi, Pertamina had already reached a supply agreement with the creditors. Under this agreement, Pertamina will sell $600 million petrochemical products in barter for middle distilate and light naphta.
“Therefore, we are not spending any amount on this project, but we have a 15 percent stake in the plant’” he said. (*)