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T Linde Indonesia, a subsidiary of German-based Linde Group, announced its plan to build an air separation plant worth Rp 1 trillion (US$ 117.33 million) in Cilegon, Banten, to supply industrial gas to PT Krakatu Posco’s (KP) steel plant.

The new plant, which is estimated to begin operation in October 2013, would be capable of producing around 3,000 tons of oxygen, nitrogen and argon gas per day, said Sanjiv Lamba, a member of Linde Group’s executive board.

“Our decision to invest and build what will be Indonesia’s largest air separation plant demonstrates our continued commitment to supporting our valuable customer, Krakatau Posco, in its growth plans, and also to meet future demand and market opportunities going forward,” he said at an exclusive interview session with The Jakarta Post on Friday in Jakarta.

The gas supply contract with Krakatau Posco would last between 15 and 20 years.

Lamba revealed that in addition to gas for the steel plant, the air separation plant would also produce liquid oxygen, nitrogen and argon for other industrial customers across West Java.

The liquid oxygen produced by the plant would go to smaller steel plants around Cilegon. The nitrogen would be taken by tire producers to improve the quality of tires. The argon would be used by automotive industries to support their welding activities, Lamba said.

Linde Indonesia has been delivering gas to industrial customers in Java since 1971. In addition to supplying gas, the company also provides other services, such as installing gas equipment and pipelines on site.

Lamba said that Indonesia’s investment climate had dramatically improved over the past 10 years and believed that it would continuously improve in the future. He called on the government, however, to provide incentives to allow the company to further invest in the country.

“We would be very happy if the government could provide additional incentives. When I went to invest in Malaysia and Thailand, for example, the investment boards there gave me incentives such as tax holidays, infrastructure provisions and land acquisition assistance,” he said.

He also expected that the government would lower electricity rates for his company. He argued that the company’s power consumption was stable for long term and different from other industries with fluctuating consumption that might cause losses to power providers.

In the future, Linde Indonesia aimed to supply gas to several industries other than steel, Lamba said. The company was considering building a carbon dioxide plant to meet demand from beverage industries.

“We are also looking at much smaller segments such as supplying welding gas for small manufacturing and fabricating shops. We want to support development of small industries,” he told the Post.

Supplying gas to the healthcare industry is also part of future strategies. Lamba said that currently hospitals in Indonesia were not yet capable of absorbing high-quality gas supplied by the company due to high prices.

“In the future, we believe that hospitals will need higher quality gas as the quality of services increases,” he said.