Indonesia attracts 1.7 bln USD investment in world’s 2nd integrated petrochemical complex hinh anh 1A worker was supervising the construction process of a new polyethylene plant in Chandra Asri Petrochemical's integrated petrochemical complex in Cilegon, Banten, on June 18, 2019 - Illustrative image (Source: Antara News)
Jakarta (VNA) - Indonesia’s Chandra Asri Petrochemical (CAP) has announced that it had secured an investment of 1.7 billion USD for the second world-scale integrated petrochemical complex in Indonesia.

CAP, Indonesia's largest integrated petrochemical company producing olefins and polyolefins, has selected Thai Oil Public Company Limited (Thaioil) as its chosen strategic investor, the company said in a press statement.

The two enterprises have signed definitive agreements to proceed with a capital increase in CAP via a Pre-Emptive Rights Issue, to be filed with the Financial Services Authority of Indonesia (OJK).

The investment in CAP will be made via Thaioil's designated subsidiary, which will act as the standby buyer to underwrite a successful transaction.

CAP’s major shareholders, Barito Pacific and SCG Chemicals Co., Ltd. (SCG Chemicals), fully support this corporate action to inject equity into CAP.

The net proceeds will be used for the development and construction of CAP's second world-scale integrated petrochemical complex by its subsidiary, PT Chandra Asri Perkasa (CAP 2), which will comprise, among others, a cracker unit, polymerized olefins, as well as related facilities and utilities.

This is in line with CAP's strategy to expand its production capacity and business scale to serve the needs of the Indonesian market.

The total estimated investment from Thaioil obtaining a 15 percent shareholding stake in CAP after the rights issue, and SCG Chemicals retaining approximately 30.57 percent of its shareholding stake in CAP, is up to 1.3 billion USD.

The transaction is still subject to regulatory approvals, including from the OJK, and is expected to be completed no later than September 30. It will be one of the largest rights issue ever conducted on the Indonesia Stock Exchange (IDX).

Subject to a successful Final Investment Decision (FID) on CAP 2 targeted for 2022, Thaioil and SCG Chemicals may further collectively invest up to 400 million USD.

Investment in CAP 2 is projected to be some 5 billion USD. Construction is expected to take four to five years, creating 25,000 jobs over the period. It will double the company's production capacity from the current 4.2 million tonnes per year to more than eight million tonnes per year.

This will help fulfil Indonesia's growing domestic demand, reduce dependency on imports, develop the country's local downstream petrochemical industry, support the government's vision for Industry 4.0, and create high-value long-term careers, CAP noted in the press statement./.