Pusri will build 2 factories in Java

State fertilizer producer PT Pupuk Sriwidjaja (Pusri) revealed a plan on Wednesday to build two urea fertilizer factories in Cepu, Central Java, and Gresik, East Java.

“The capacity is expected to be 2 million tons per year,” Pusri managing director Arifin Tasrif said during a hearing with lawmakers in Jakarta.

He said the construction of the two factories was expected to commence next year and be completed by 2014.

It will, however, very much depend on whether or not Pusri can secure gas supply from the Cepu Block to power the two factories. Arifin said the company hoped it could get certainty regarding the matter by the end of the year.

He added that between Rp 10 trillion (US$1.16 billion) and Rp 11 trillion might be needed to finance the construction, 30 percent of which was expected to come from internal cash and the remaining 70 percent from external sources.

He said some state lenders had expressed interest in financing the project, but added that Pusri might as well issue bonds to secure funds.

Arifin said the two factories were expected to take over fertilizer supplies from Kalimantan and Sumatra and save distribution costs by at least $50 million per year and energy costs by $9 million per year.

“If the price of gas is $9 per MMBTU [million British thermal units], then energy and distribution cost savings can reach $158 million per year,” he added as quoted by tempointeraktif.com.