The financing of Tuban petrochemical project on final stage

The financing for the continuation of the Tuban petrochemical project has reached its final stage after the state owned Pertamina agreed to guarantee the loan scheme for the project which was halted during the peak of the country?s financial crisis in 1998, Bisnis Indonesia reported on Monday.

Deputy Chairman of the Indonesian Bank Restructuring Agency (IBRA), M. Syahriel, said in Jakarta over the weekend that with Pertamina?s agreement to partly guarantee the loans, the agreement for the disbursement of the loan with creditors could be signed in February next year.

Creditors comprising of Beyond Petroleum, ANZ-Bank, Japan Bank for International Corporation (JBIC), Nippon Export Insurance and Mitsui have agreed to provide US$400 million to finance the continuation of the East Java-based petrochemical project. The disbursement of the loan has been delayed for several times because the government could not meet their requirement.

BP and ANZ Bank initially asked the government to provide political risk insurance as the condition for the disbursement of the US$400 million fund to finance of the Tuban petrochemical project, while the Japanese creditors requested a number of conditions related to force majeur if it is approved to take part 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. (*)