JAKARTA (Rambu Energy) – PT Panca Amara Utama, a subsidiary of listed PT Surya Eka Perkasa Tbk, has secured US$509 million worth of syndication loan led by the International Finance Corporation (IFC), an arm of the World Bank. The loan syndication, which was signed on Friday afternoon in Jakarta, will be used to build an ammonia plant in Uso village, Luwuk City, Central Sulawesi Province.
The ammonia plant will have a capacity of 700,000 metric tons of ammonia per annum or 2,000 MT per day. The plant is scheduled to come on stream at end 2016, delayed from early plan of mid-2015 and expected to create 1,600 new jobs.
President Director of PT Panca Amara Utama Vinod Laroya told reporters at the press conference that the ammonia project is “significant project”, which will support Indonesia’s economy, in particular the eastern part of the country.
He also praised IFC as well as international financial institutions that have supported the project. The members of the syndication loan are ANZ, HSBC, Korea Development Bank, OCBC, SMBC, Standard Chartered and UOB.
Of the US$509 million loan, IFC extends US$94 million and the other bank members provide the remaining US$415 million.
The total cost to build the ammonia plant reaches US$800 million, higher than initial estimation of US$750 million.
Panca Amara Utama will build an integrated ammonia complex comprising of ammonia synthesis installation, ammonia storage tank farm, a jetty to export the ammonia, power plant, and other utilities.
Commenting on the delay of the project, Laroya argues that the project requires thorough plan and “everything has to be planned precisely,” he said.
In addition, some of the equipments and machines are newly built and requires carefully production process. The equipments will then imported and transported to the site, which will also take time.
Laroya said majority of the costs are spent for engineering and production and lesser costs to be spent for construction.
The syndicated loan has a tenure of 12 years and has a “competitive rate”, taking into account Indonesia’s country risk, said Laroya.
The remaining investment need (US$291 million) to build the plant will come from common shareholders (US$243.9 million), shareholders’ loan US$20 million and IFC C loan US$20.1 million.
Sarvesh Suri, Country Manager of IFC, said that the syndication loan to PT Panca Amara Utama shows foreign investors interest to support manufacturing sector in Indonesia. “We are confident about Indonesia’s economic growth and the role of private sector to support the national economy,” he said.
Suri noted that the loan to Panca Amara Utama is the largest greenfield project being funded by IFC in Asia over the last ten years.
Ammonia is the raw material for fertilizer and other chemical products such as DAP, NPK, Nitric Acid, Caprolaciam, Acrylonitrile and Amines.
Panca Amara has earlier entered into an extendable 13 year gas supply contract with Donggi Senoro from 2015 to 2027. Donggi Senoro gas fields have agreed to allocate 55 million metric standard cubic feet per day (MMSCFD) of natural gas to Panca Amara Utama, 250 MMSCFD to PT Donggi Senoro LNG (DSLNG), a private sector liquefied natural gas (LNG) producer located adjacent to the proposed Panca Amara’s site, and about 5 MMSCFD to PLN, the state-owned electric company.
DSLNG is the anchor plant of the Donggi Senoro gas fields. The natural gas will be supplied from neighboring DSLNG and thus a gas pipeline will not be required. There will be only one or two ships that dock at the jetty per week for ammonia transportation.
Panca Amara develop the ammonia plant complex on around 200 hectares of land. During the first phase, the company will develop facilities on 25 hectares of land. Later on, it plans to develop downstream ammonia products. (*)
By Roffie Kurniawan*