JAKARTA (TheInsiderStories) - Indonesia state-owned energy producer, PT Pertamina is offering up to 95 percent participating interest for Bontang grass root refinery (GRR Bontang) in East Kalimantan, which is estimated to cost up to US$15 billion, said one senior official on Tuesday.
Earlier, Director for Refinery and Petrochemical Megaproject of Pertamina Rachmad Hardadi said around 50 investors has expressed interests on the project. Pertamina expects to start the development of GRR Bontang in the first quarter of 2019 and completed by 2023.
“The submission of request of information will be sent on April 2, followed by signing agreement on April 28. We hope on April 28, we will have a strategic partner and to be followed by joint bankable feasibility study until December, 2017,” said Senior Vice President for Business Development of Pertamina Iriawan Yulianto at Project Expose for GRR Bontang in Jakarta on Tuesday (Feb 28).
He said the project should attract investors as 100 percent offtaker for the gasoline and jet fuel output will be Pertamina, 100 percent diesel’s product shall be exported by joint venture company or Pertamina. The other term and condition is that Pertamina has an option to increases its participating interest to 10 to 15 percent in 5 to 10 years time.
GRR Bontang is closed to the existing Badak LNG. The project will be built on 460 hectares of land, with 5 billion barrels of oil stocks The refinery will has capacity to produce 300,000 barrels per day (bpd), gasoline production of 60,000 bpd and diesel production at least of 124,000 bpd.
Iriawan added that the domestic demand is prioritized for the refinery’s output and export is only allowed when domestic demand is already met. Furthermore, he said, the project has incentive from the government in term of land and incentive scheme like tax holiday or tax allowances.
The project has an opportunity get income tax break from 10 to 100 percent for a period of between 5 and 15 years and can be extended up to 15 years. It may also get tax allowance in form of tax income reduction by up to 30 percent of the fixed asset investments charged for 6 years.
Hardadi explained that Pertamina will optimize the assets of PT Badak NGL to accelerate the implementation of GRR Bontang project. He said GRR Bontang, with capacity of 300,000 bpd, is a project with a public private partnership scheme, in which Pertamina will become Responsible Partnership Project. (*)