Bakrie Energy Plans $13b Investment In Indonesian Petrochemical Plant Over 6 Years

Jakarta Globe, Janeman Latul, February 02, 2010

33PT Bakrie Energy International said on Monday that it would invest $16 billion in a petrochemical plant over the next six years, including $300 million in the first phase this year.

Yuanita Rohali, the company’s chief financial officer, said construction was scheduled to begin in early 2011. She said about 70 percent of the $300 million of the initial investment would come from loans.

“We are currently in talks with at least four financial institutions, including banks, from West Europe,” she said, declining to offer more details.

Yuanita said the company would also offer a stake in the project to strategic investors. “There are several investors from Germany, South Korea and the Middle East that have already expressed an interest,” she said.

Bakrie Energy is a newly established unit of Bakrie group holding company PT Bakrie & Brothers. When Bakrie Energy was established in December, the group said it would be involved in commodities trading and investments in manufacturing, among other sectors.

“It’s mainly a new cash cow for the Bakrie group,” Yuanita said.

Bakrie Energy’s petrochemical project would represent the first foray into the sector by the Bakrie group, a politically connected conglomerate with interests ranging from coal mining to plantations.

“The company [Bakrie Energy] has been established in Singapore with three subsidiaries, PT Bakrie Petro International, PT Bakrie Agro Commodity International and PT Bakrie Amonium International,” Yuanita said.

She said Bakrie Amonium would responsible for the petrochemical project, while Bakrie Petro and Bakrie Agro would focus on commodities trading.

Ari S Hudaya, current president director of the group’s coal miner, PT Bumi Resources, has been appointed president director of Bakrie Energy, Yuanita said.

She said the company was already trading crude oil, palm oil, rubber and coal, and expected trading activities to contribute $500 million in revenue to the group this year.

Yuanita said Bakrie Energy was looking at possible locations for the petrochemical plant, which would likely be finalized in the third quarter.

“By early 2011 we could start construction of the project so the initial production could begin in about in two and a half years,” she said.

Yuanita said the petrochemical plant’s products would include fertilizer, plastics and fuel, and potential profit from the project had been estimated at $160 million annually.