April 12, 2013
Pupuk Indonesia builds fertiliser plant in Palembang, South Sumatra
Pupuk Indonesia started construction work on a fertiliser plant in Palembang, South Sumatra, bringing a much-needed upgrade to the country''s ailing agriculture sector.
The plant, estimated to cost US$561 million, will have the capacity to produce 990,000 tonnes of fertiliser per year and is expected to be operational by 2015. It will be located in the vicinity of an existing plant in the province.
"This is our largest project in the past 20 years," Pupuk Indonesia president director Arifin Tasrif said in a press release. He indicated that the new plant will be more efficient than the old one.
The current facility consumes 38 million metric British thermal units (mmbtu) of natural gas to produce 570,000 tonnes of fertiliser per year, while the consumption of the new plant will be 25 mmbtu with significantly higher output.
The project is financed by loans from seven lenders, including Bank Mandiri, Bank Negara Indonesia, Bank Rakyat Indonesia, Bank Central Asia, and regional development banks such as Bank Jabar Banten (West Java and Banten), Bank Sumsel Babel (South Sumatra and Bangka and Belitung) and UOB Indonesia.
Pupuk Indonesia has appointed state-owned engineering firm Rekayasa Industri and the Japan-based Toyo Engineering Corporation to handle the construction of the plant.
Arifin said the construction of the plant is in line with the 2010 presidential decree aimed at revitalising the country''s fertiliser industry. According to him, this programme is aimed not only at increasing output, but also improving efficiency. He added that the company planned to build four new fertiliser plants, with the construction of two of them already underway.
The four plants in the pipeline will boost the company''s output from 2.2 million tonnes per year to 3.5 million tonnes per year. They are also intended to replace 50% of output from existing plants, which are less efficient.
"The new plants will enable us to reduce energy costs by about US$210 million a year," Arifin added.
Pupuk Indonesia is the holding company of several fertiliser producers, including Pupuk Sriwidjaja in Palembang, Pupuk Iskandar Muda in Aceh and Pupuk Kujang in Cikampek, West Java.
Last December, state-controlled coal miner Tambang Batubara Bukit Asam inked a 30-year deal with Pupuk Indonesia to supply tens of millions of tonnes of coal.