S?pore firms agree to finance Tuban petrochemical project

A syndication of investors from Singapore have expressed their keen interest to provide a fresh fund of about US$400 million to finance a delayed petrochemical project in Tuban, East Java, Koran Tempo reported on Monday.

The deputy chairman of the Indonesian Bank Restructuring Agency (BPPN) for asset management credit (AMC) I Nyoman Sender said in Jakarta over the weekend that the Singapore investors? commitment to finance the project would pave the way for the settlement of Tirtamas Group?s debts to the agency.

The Tuban petrochemical project which is directly operated by Tirtamas Group?s subsidiary PT Trans-Pacific Petrochemical Indotama has been transferred to BPPN as part of the business group?s collateral for the repayment of its debts to the government.

The petrochemical project and the business group?s three other assets are now under the supervision of a joint venture established by the business group and IBRA. The petrochemical project has been 60 percent completed.

According to the government?s Commission for Financial Sector Policy (KKSK, the resumption of the Tuban petrochemical project is a critical factor for the complete settlement of the Tirtamas Group?s debts to IBRA. The business group is estimated to have spent about US$350 million for the project.

Sender said that the Singapore investors agreed to provide the financial assistance on the condition that there are companies, which have made a firm commitment to buy the petrochemical production.

According to him, British Petroleum and state owned oil and gas company Pertamina has agreed to buy the petrochemical production but with four conditions.

He said that Pertamina and IBRA had reached some understanding about the four conditions. "If Pertamina sticks to its previous demand, we are afraid that the Singapore investors would cancel their financial commitment," he added.(*)