Banks Start Looking at Bio-Fuel Business
Wednesday, 10 January, 2007 | 15:27 WIB

Tempo Interactive, Jakarta: The bio-fuel development program has begun to gain the attention of the banking sector.

Several banks in Indonesia have started to get involved in financing bio-fuel businesses.

One of the largest banks in Indonesia, Bank Mandiri, signed an agreement of cooperation to provide loans amounting to US$432 million or Rp3.9 trillion yesterday (9/1) to support bio-fuel projects.

The agreement was signed with the Sinar Mas Group, PT Incassi Raya, PT Permata Sawit and the Straia Group in Jakarta yesterday.

According to Christina Damanik, Bank Mandiri spokesperson, the bank has allocated loans for plantation and related businesses amounting to Rp22 trillion.
“This amount is 36 percent of the total national plantation loan portfolio ,” she told Tempo.

The agreement signing was witnessed by State Minister for State-Owned Enterprises (SOEs) Sugiharto, Research and Technology Minister Kusmayanto Kadiman, Agriculture Minister Anton Apriyanto, Environment Minister Rachmat Witoelar, Trade Minister Mari Elka Pangestu, Coordinating Minister for People's Welfare Aburizal Bakrie and Coordinating Minister for the Economy Boediono.

Sinar Mas, via PT Smart Tbk. (Sinar Mas Agro Resources and Technology) is working together with Hong Kong Energy Ltd. and CNOOC to develop bio-fuel project worth US45.5 billion.

This project is to develop bio-diesel from oil palm as well as bio-ethanol from sugar cane and cassava.

Christina said that in addition to loan for major entrepreneurs, Bank Mandiri is also allocating Rp11.08 trillion for plasma farmers.

“Since it was appointed as the bank to implement the program of bio-energy development and plantation revitalization credit on December 18, 2006, Bank Mandiri has provided Rp215 billion fund for plasma farmers in Central Kalimantan, Jambi and North Sulawesi,” she said.

In addition to banking, the cooperation is being carried out with 59 government and private institutions.

The cooperation agreement covers the development of bio-fuel businesses from upstream to downstream and amounts to US$12.4 billion.

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