JAKARTA (TheInsiderStories) – The Indonesian government welcomes the plan of the Siam Cement Group (SCG) to develop a mega petrochemical project with an estimated investment of US$5.5 billion, equals to Rp75 trillion, in Cilegon, Banten province. 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.
“The SCG investment is a form of cooperation between the group (SCG) and PT Chandra Asri Petrochemical Tbk,” Hartarto said after holding a meeting with the delegation of Siam Cement at his office last Friday (16/2).
On Thursday, the minister accompanied the SCG delegation in meeting with President Joko Widodo at the State Palace. “It (Siam Cement Group) will add investment of around US$5.5 billion. Hopefully, it would commence production by 2022,” Minister Hartarto said at the State Palace.
He said the President support the company’s plan given that Indonesia’s petrochemical industry at present is still relying on imported raw materials. 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.
The Thai company is expected to develop the petrochemical plant through or in cooperation with PT Chandra Asri Petrochemical Tbk. At present Siam Cement holds 30 per cent stakes in Chandra Asri.
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.
The government, said Hartarto, expects to issue tax holiday policy by the end of this month. Some strategic industries, including petrochemical, could obtain such tax incentives.
The Siam Cement’s petrochemical plant will produce naphtha cracker, polypropylene and polyethene with a planned capacity of 1.2 million tons per annum. Its output will be mainly allocated to meet domestic industry needs.
CEO of Siam Cement Group Roongrote Rangsiyopash added that his team met with President Joko Widodo to convey the company’s plant to build a petrochemical plant. Prior to starting the construction, the group will conduct a feasibility study, which is expected to last about nine months.
“We have been here for several years. We are now planning to develop the second petrochemical complex. We have been trying to convince the (Indonesian) government that we are committed to developing this project and we hope the government will support this project,” said Roongrote.
In addition to Siam Cement Group, the Malaysian-based Genting Energy Ltd, which is currently developing a gas block in Bintuni, West Papua, has also unveiled its plan to develop a petrochemical complex in the Bintuni area, West Papua, in cooperation with an investor from China, according to the Industry Ministry.
The planned project will be separated from the Indonesian government plan to develop a gas-based petrochemical industrial complex in Bintuni area, one that will process the natural gas produced by Tangguh LNG project, developed by BP.
Wandy Wanto, deputy general manager of Genting Energy, said after meeting with the Industry Ministry on Feb. 15, that the development of the petrochemical plant is an effort by the company to support the Indonesian government’s plan to develop the country’s downstream petrochemical industry and make use of the gas output from the Kasuri gas block in Bintuni. (*)
(US$1 = 13,500)
Written by Roffie Kurniawan, email: email@example.com