Jakarta, September 5, 2014 — IFC, a member of the World Bank Group, and PT Panca Amara Utama, PT Surya Esa Perkasa Tbk.’s subsidiary, today signed a syndication agreement under which PT Panca Amara Utama will obtain a USD 509 million long-term loan for the construction of its ammonia plant in Central Sulawesi Province. The deal will help support Indonesia’s manufacturing sector and create jobs.
The new plant, which will cost a total of USD 800 million to build and have an annual capacity of 700,000 metric tons, is part of the Indonesian government’s plan to prioritize local manufacturing of the country’s natural resources into industrial products. The plant is expected to begin operation in late 2016 and create more than 1,600 direct and indirect jobs around the Banggai Regency located at the eastern end of Central Sulawesi.
The syndication is led by IFC and includes seven international banks including ANZ, HSBC, Korea Development Bank, OCBC, SMBC, Standard Chartered, and UOB. IFC will also take an equity position in PT Panca Amara Utama, a subsidiary of PT Surya Esa Perkasa Tbk., in the form of a subordinated loan. This is IFC’s largest greenfield project funding in Asia over the last decade.
“We appreciate the trust shown by IFC and the seven international banks in our company and believe the financing will benefit way beyond PT Panca Amara Utama,” said PT Panca Amara Utama Director Vinod Laroya. “As a private Indonesian company, being able to comply with IFC’s terms and conditions for sustainable-development loans is proof that we are committed to balancing profit and care for the people and the environment.”
IFC Indonesia Country Manager Sarvesh Suri said the loan to PT Panca Amara Utama showcases foreign investors’ willingness to help support Indonesia’s manufacturing sector. International capital normally seeks projects in the more developed western Indonesia, but the new plant’s location in eastern Indonesia will help attract further investments in the region.
“We believe in the strength of the Indonesian economy and the private sector’s role in promoting the country’s economic development,” Suri said. “PT Panca Amara Utama is a thriving Indonesian company capable of executing sizable strategic projects while complying with international best practices. Upon completion, the ammonia plant is expected to generate significant growth in the eastern part of Indonesia and be a benchmark for natural gas utilization.”
Ammonia is used extensively as a raw material in various fertilizers. The plant will adopt a KBR patented technology that helps conserve energy while increasing outputs using the same amount of natural gas. The project will be developed by a consortium of Japan’s Toyo Engineering Corporation and Indonesia’s PT Inti Karya Persada Tehnik.
“The construction of this ammonia factory will provide high added value to both the upstream and downstream sectors of the natural gas industry,” said Vinod Laroya. “PT Panca Amara Utama’s ammonia production aims to meet demands both internationally and in Indonesia as the domestic market continues to expand as a result of the growing fertilizer industry.”
PT Panca Amara Utama will draw its natural gas from the Senoro-Toili gas field, which will be managed by the joint operating body whose members include PT Medco Energi, PT Pertamina Hulu Energi, and a joint venture of Mitsubishi Corporation & Korea Gas Corporation. The company is entitled to as much as 55 MMSCFD worth of natural gas. This is PT Surya Esa Perkasa Tbk.’s second foray into downstream gas manufacturing after the company established its liquefied petroleum gas refinery in the South Sumatra City of Palembang in 2007.