A joint venture between PT Chandra Asri Petrochemical Tbk and Michelin, PT Synthetic Rubber Indonesia factory located in Cilegon, West Java - Photo by the Company

JAKARTA (TheInsiderStories) – An integrated petrochemical company in Indonesia, PT Chandra Asri Petrochemical Tbk (IDX: CAPC) has signed an eight-years Export Credit Facility with worth of US$172 million with The Japan Bank for International Cooperation (JBIC) and BNP Paribas (Tokyo Branch). Nippon Export and Investment Insurance (NEXI) will provide insurance cover for the tranche from BNP Paribas.

“The Facility will be used to finance the ongoing construction of our new US$380 million Polyethylene Plant that will have a capacity of 400 KTA” said Erwin Ciputra, President Director of CAP in a written statement on Monday (12/17).

The construction of the plant is progressing on track (around 80 percent) with plant startup scheduled for fourth quarter of 2019. The new plant will produce High Density Polyethylene (HDPE), Linear Low Density Polyethylene (LLDPE), and Metallocene LLDPE (mLLDPE).

Post completion, it will bring CAPC’s total polyethylene production capacity to 736 KTA. Ciputra said, Indonesia’ current polyethylene market demand is estimated around 1.4 million ton per annum (TPA) and will continue to grow along with the country’s GDP.

“Our new PE plant will provide additional source of domestic supply of PE products, thereby contributing to import substitution and reduction of foreign exchange outflows”, he explained.

Recently, Chandra Asri, prepares second petrochemical factory with costs $5 billion. The factory located in Cilegon, Banten province, treading in the footsteps of recent election-related technology to the construction of the second petrochemical complex in Indonesia.

The second complex will produce 1.1 MMTA Ethylene, 600 KTA propylene, 175 KTA Butadiene, Benzene KTA 363, 450 KTA and 450 KTA PP HDPE for surgery full year. He said, its unit will complete the basic engineering design in late 2018 and the final investment decision is expected to have at the beginning of 2020 and operating in early 2024.

“We are optimistic that the execution of the project will run smoothly, with of course the support and incentives from the government as one of the 10 industries that are prioritized in the National Industrial Development Master Plan 2015-2035 year,” he added.

This new petrochemical targeted to reduce the number of Indonesian imports olefin and polyolefin which now consists of more than 2 million metric tons per year.

Previously in February, 2018, the company joined with Thailand’s Siam Cement Group has commenced the groundbreaking of a new Polyethylene Plant project with a capacity of 400 kilotons per annum. At present Siam Cement holds 30 per cent stakes in Chandra Asri.

The total investment cost for the project is estimated $350 million. The completion of project is scheduled by the end of 2019 and commence operation at the beginning of 2020.

The Company currently operates a 336 KTA of polyethylene plant, therefore, this new construction of 400KTA PE plant will bring total CAP’s PE production to 736 KTA.

The development of the petrochemical plant is expected to reduce downstream industry’s dependence on imported petrochemical raw materials. Industry Minister Airlangga Hartato said the project will become the largest petrochemical project to be built in Indonesia as well as Thailand.

At present, domestic production of naphtha cracker reached only 900,000 tons, while demand reached 1.6 million tons. Therefore, Indonesia has to import the raw material to cover the gap.

The country’s naphtha cracker output is far behind that of Singapore totalling 3.8 million tons per annum and Thailand 5 million tons per year.

Hartarto noted that the group’s mega petrochemical project could be viable to get tax holiday from the government, which is being finalized by the government.

TPIA, a subsidiary of PT Barito Pacific Tbk (IDX: BRTP), an integrated petrochemical company producing olefin and polyolefin. Today, the CAP is the largest a manufacturer of petrochemicals in Indonesia with an estimated domestic market share of 52 percent for Olefin, 24 percent for polyethylene, and 29 percent for Polypropylene.

Email: linda.silaen@theinsiderstories.com

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