Commission VII of the Indonesian House of Representatives hopes that the construction of a new oil refinery with a capacity of 300 thousand barrels per day (BPD) in Bontang, East Kalimantan can be accelerated. One of the efforts to accelerate this is by changing the development scheme to an assignment to PT Pertamina.
Member of Commission VII of the Indonesian House of Representatives Dito Ganinduto said the plan to build the Bontang Refinery had been implemented two years ago.
However, the government has yet to decide which investors will work on this project. The Government and Business Entity Cooperation Scheme (PPP) implemented in this project are considered to have slowed refinery construction.
"This is a project, so using a consultant, evaluated one by one. I think this is too long-winded, ”he said during a working visit to the Bontang LNG Plant.
The progress of the Bontang Refinery is very different when compared to the Tuban Refinery which was carried out under an assignment scheme to Pertamina. Because it is in the form of assignments, Pertamina can move faster so that it has reached the stage of forming a joint venture with its partner, Rosneft Oil Company.
The legal protection already exists, why can't it just be changed at the Bontang refinery into an assignment scheme to Pertamina. In the next meeting with the Minister of Energy and Mineral Resources (ESDM) Ignasius Jonan, Dito stated that he would suggest that the Bontang Refinery be built an assignment scheme. This is because Indonesia needs four new refineries in 2025 to achieve self-sufficiency in fuel oil (BBM).
Until now, not a single project has started construction. Moreover, the land needed for the construction of the Bontang Refinery is also ready and there is no need to purchase land.
The Bontang government is also ready to provide full support by facilitating licensing so that refineries can be built immediately. If (Bontang Refinery) can do the assignment, everything is ready, just waiting to start.
Deputy Chairman of Commission VII of the Indonesian People's Representative Council, Fadel Muhammad, also emphasized the need for the construction of the Bontang Refinery be accelerated.
This is because, although it is a large country with a very large population, Indonesia has not built a new refinery for 25 years. This he called something wrong. Therefore, he hopes that the Bontang Refinery can be built immediately.
"This infrastructure is ready, local government support is very good, the House of Representatives will also provide full support for this.
Mayor of Bontang, Neni Moerhaeni, said that there are two large factories in Bontang City, namely the LNG Refinery from Badak NGL and the Kaltim Pupuk Factory. With the existence of these two large factories, Bontang City has contributed around 10% of the 30% total contribution of East Kalimantan to the state budget.
We are excited to encourage the construction of a new refinery by the government to be located in Bontang. We also appreciate Pertamina for being no less encouraging to realize this project.
Regardless of the scheme used at the Bontang Refinery, Pertamina's Director of Megaproject Processing and Petrochemical Rachmad Hardadi said Pertamina would accelerate the construction of the Bontang Refinery.
From the investor selection stage and the Bankable Feasibility Study / BFS, he said it was still under the authority of the government. However, it is hoped that this stage can be completed by the end of 2017. Furthermore, from early or mid-2018, Pertamina will begin to assist investors in land acquisition.
"This site preparation clean up is due to the fact that some areas are still swampy, it will take three years".
But we will speed up to just 1.5 years. Assuming the land is ready in 2019, the Bontang Refinery is targeted to be completed in mid-2023. Currently, his party is still waiting for the government. This is because the construction of the Bontang Refinery is still in the stage of selecting consultants by the government. After the consultant is selected at the end of November, then Pertamina and the consultant will start selecting investors.
Unfortunately for the partner selection stage, this cannot be as fast as when Pertamina chose a partner for the Tuban Refinery. This is because the government determines who are the appropriate partners.
"For the assignment scheme, I can do it myself. If the PPP has to report it first and the accompanying consultant must be convinced. So if the assignment can be completed in three months, if it is PPP it can be 1-1.5 years.
Assuming the consultant is selected by the end of November, the selection of partners for the Bontang Refinery can begin immediately. Pertamina itself has prepared a list of potential investors.
The prediction is that the selection of this partner will be completed by the end of 2017. Pertamina's President Director Dwi Soetjipto stated his readiness if the Bontang Refinery development scheme is changed to an assignment.
Although not the majority, the company is also ready to fund some of the investment needs for the 300 thousand BPD refinery project. In the future, Pertamina will acquire partner shares bit by bit.
"Our target is towards the majority, but the inclusion is gradual on the way. In accordance with Presidential Regulation (Perpres) number 146 of 2015 which is the basis for accelerated refinery development, refinery funding with the government and business entity cooperation (PPP) scheme and assignments is indeed different.
For PPP, financing is borne by private business entities. Meanwhile, the financing for the assignment scheme can be borne by the government or the corporation.
If the assignment scheme is funded by the government, Pertamina is obliged to ensure that the project is completed according to the given budget and timeframe, as well as guarantee the supply of crude oil. if it is funded by a corporation, Pertamina is allowed to work on its own or in cooperation with other business entities.
Indonesia needs to build new refineries, given the high demand for fuel. Until 2025, the demand for gasoline is predicted to increase by 7% and diesel oil by 5%. With the two new refineries, the national gasoline and diesel production capacity will increase to 1.2 million BPD from the current 537 thousand BPD.
Investor Daily, Page-9, Monday, Oct 24, 2016
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