Tuban project will be delayed for another six months

The resumption of the Tuban petrochemical project will likely be delayed for another six months due to uncertainties related to the refinancing of the project, Bisnis Indonesia reported on Friday, quoting unidentified sources.

"With the current development, it is likely that the project could be only started in March 2003 rather than September this year as initially scheduled," the source said.

Two consortiums comprising of Beyond Petroleum and ANZ Bank, and Japan Bank for International Cooperation and Nippon Export Insirance (Nexi) have expressed interest to refinance the East Java-based petrochemical project which was halted during the peak of the country?s worst ever economic crisis in 1999.

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.

"The negotiations with the two consortium still face uncertainties due to their demand," he said.

BP and ANZ Bank has 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 consortium has requested a number of conditions related to force majeur if it is approved to take part in the project.

The source said that IBRA would send this week a team to Japan to further negotiate the deal for the resumption of the Tuban project with the Japanese consortium. (*)