T

he country’s second-largest private liquefied petroleum gas (LPG) refinery company, PT Surya Esa Perkasa, is planning to enter the ammonia business by building a plant in Central Sulawesi.

Construction of the plant is scheduled to begin in the middle of 2013, while production is targeted to start in 2014. Ammonia can be used as fertilizer and it can also be processed as ammonia nitrate, which is used in explosives.

The plant will be operated by Surya Esa Perkasa’s subsidiary PT Panca Amara Utama and will rely on gas supplies from the Donggi Senoro block for fuel.

Surya Esa Perkasa’s president director Garibaldi Thohir said the company would need up to US$700 million for the ammonia project.

“The project needs hefty investment, so we may look for partners. We will also seek financing from banks, including the UOB Bank and banks from Japan,” Garibaldi said on the sidelines of his company’s shares’ listing on the Indonesia Stock Exchange (IDX) on Wednesday.

He said Surya Esa Perkasa’s decision to go public would make it easier for the company to obtain financing from banks with competitive interest rates.

“Partners and banks will be more confident in building cooperation because Surya Esa Perkasa is already a public company, and one that possesses good corporate governance and maintains transparency,” Gari-baldi said.

He added that 70 percent of the ammonia produced would be allocated for fertilizer and the remainder would be channeled for making explosives for mining activities.

“The ammonia plant is our vision to contribute to the country. Surya Eka Perkasa has contributed to energy security by providing LPG. By producing ammonia for fertilizer, we can help the country to maintain its food security,” he said.

Garibaldi revealed that Surya Eka Perkasa booked about Rp 600 billion (US$66 million) in revenue and
Rp 80 billion in net profits in 2011.

“In 2012, we are predicting that net profits will increase by 10 to 15 percent, while the revenue will remain more or less at the same level as last year,” he said.

Surya Esa Perkasa officially floated its shares on the IDX after selling 250 million shares, or equal to 25 percent of its total listed shares, to the public at Rp 610 apiece last week.

The company raised Rp 152.5 billion from the initial public offering (IPO) with a market capitalization of Rp 610 billion.

The company plans to use 75 percent of the funds raised from the IPO to increase its LPG production capacity to 163 metric tons per day within the next two years, an increase of 44 percent from its current level of 113 metric tons per day.

The company will use the remaining 25 percent of funds raised from the IPO to pay off part of its debt, amounting $37 million, to the UOB Bank.

About 80 percent of the shares offered to the public were purchased by foreign institutional investors from Asian countries, such as Singapore and Hong Kong.

Shares in Surya Eka Perkasa (ESSA) opened at Rp 730 per share, an increase of 19.67 percent from its IPO price. (rcf)