The petrochemical producer, PT Chandra Asri Petrochemical Tbk (IDX: TPIA), targeting to merge with its subsidiary, PT Styrindo Mono Indonesia in Jan. 1, 2021, after get approval from the shareholders on Monday (07/12) - Photo: Special

JAKARTA (TheInsiderStories)PT Chandra Asri Petrochemical Tbk (IDX: CAPC) has won a credit rating upgrade from Standard and Poor’s (S&P) Global Ratings from B+ to BB- with outlook stable, the company said on June 3.

An integrated petrochemical company get the upgrade backed by the stronger credit quality of its parent PT Barito Pacific Tbk (IDX: BRPT) with the addition of PT Star Energy, a geothermal company in Indonesia.

The S&P BB- rating for Chandra Asri also applies to the long-term issue ratings on the company’ US$300 million senior unsecured bond. With this upgrade, the producer’ credit rating are all now on equal footing, with a rating of Ba3 from Moody’s, BB- from Fitch, and BB- from S&P. This is four-notches below Indonesia’ sovereign rating of Baa2, BBB and BBB, respectively.

“We take this to be positive external recognition of the progress and efforts we have made in the strengthening of CAPC’ credit quality. We will continue to maintaining robust liquidity, and sustaining a strong balance sheet to uphold our financial strength as we continue to grow and expand for the future” said Erwin Ciputra, the President Director in a written statement.

Recently, Chandra Asri received government’ tax holiday facility from its $380 million polyethylene plant. The company gets a revenue tax deduction by 100 percent for the first 10 years after commercial production, then 50 percent for the following 2 years.

In February 2018, the company has commenced the groundbreaking of a new Polyethylene Plant project with a capacity of 400,000 tons annually from the recent capacity at 336,000 tons per year. The plant located in Cilegon, Banten province. This new polyethylene plant facility will produce High-Density Polyethylene, Linear Low-Density Polyethylene, and Metallocene.

The rapid growth of the plastics and packaging industries in Indonesia has driven Chandra Asri to anticipate the high domestic demand. Indonesia’ current polyethylene market demand is estimated at around 1.4 million ton per annum and will continue to grow along with the country’ GDP.

The completion of the 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’ PE production to 736 KTA.

President Joko Widodo reportedly supports the company’ plan given that Indonesia’ petrochemical industry at present is still relying on imported raw materials. Currently, domestic production of naphtha cracker reached only 900,000 tons, while demand reached 1.6 million tons. Therefore, Indonesia has to import raw material to cover the gap.

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, Papua.

Chandra Asri is the largest 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.

Chandra Asri producing olefins and polyolefins. The company is the only producer who operates a naphtha cracker, and is the sole domestic producer of ethylene, styrene monomer and butadiene.

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