The Indonesian government has refused a provision in a debt restructuring agreement signed by PT Trans Pacific Petrochemical Indotama (TPPI) and its creditors in December, as per Jakarta Post. The Indonesian Government is the biggest shareholder in TPPI. TPPI is a fuel producing company and around 70% of its assets belong to the state.
As per coordinating Economic Minister Hatta Rajas, a condition that required state oil and gas producer PT Pertamina to purchase fuels from TPPI at a price Rp 500 a liter higher than the market price, is unacceptable. The House of Representatives Commission VI overseeing trade, industry, investment, cooperatives, small and medium businesses and state-owned companies, also urged the government last month to cancel TPPI’s debt restructuring due to the potential Rp 20 trillion in losses inflicted on state finances.
Based on the December agreement, TPPI is given 75 working days to pay US$400 mln plus Rp 1 trillion to creditors, comprising of US$300 mln to Pertamina, US$100 mln to upstream oil and gas regulator BPMigas and Rp 1 trillion to state asset management company PT PPA. TPPI currently also owes Pertamina US$406 mln in cash for failing to deliver products and US$183 mln to be paid in automobile gas, US$169 mln to BPMigas and US$1 bln to other creditors.
The company hads won a refinancing commitment from Deutsche Bank worth US$1 bln.