The Jakarta Post | Business | Mon, October 21 2013, 11:13 AM
Oil and gas company PT Medco Energi Internasional said that it had closed down its ethanol plant in Lampung, run by its subsidiary, which will be partly divested to a new partner.
Medco Energi announced in a letter sent to the Indonesia Stock Exchange (IDX) last Friday evening that PT Medco Ethanol Lampung, which is wholly owned by its subsidiary, PT Medco Downstream Indonesia, had discontinued and closed down the operation of the ethanol plant on Oct. 16.
Medco Energi said that the closure was “due to insufficiency of sustainable feedstock supply, namely cassavas and molasses for ethanol production.”
“Having the ethanol plant closed down, the company has no more operating business unit in the downstream sector, except minority ownership in PT Puma Medco Petroleum, a high-speed diesel trading and distribution unit,”
Medco Energi did not specify the financial impact of the ethanol plant. However, it said that the close would cause a reclassification of the subsidiaries accounts in the company’s financial statement as a non-current asset held for sale and discontinued operation.
Medco Energi runs its downstream business under Medco Downstream Indonesia, which is — according to the parent company’s website — responsible for the operation of a liquefied petroleum gas (LPG) plant in Kaji, South Sumatra, an ethanol plant in Lampung, as well as a fuel storage facility in Tanjung Priok, North Jakarta and the distribution of high speed diesel.
Medco Energi signed a deal recently with Switzerland-based energy firm Puma Energy LLC, in which the latter agreed to purchase 63.88 percent stake in the former’s unit called PT Medco Sarana Kalibaru. After the deal was completed, Medco Sarana Kalibaru, which owns the high speed diesel storage facility, was renamed PT Puma Medco Petroleum.
Medco Energi president director Lukman Mahfoedz had said that his company, which is controlled by the conglomerate Panigoro family, would focus on oil and gas exploration and production business and would look for partners for its downstream business. He said that Medco Energi was looking for a partner to jointly develop the ethanol subsidiary.
Medco Energi corporate secretary Imron Gozali said the firm’s plan to divest part of stake in Medco Ethanol Lampung remained ongoing.
“The candidate buyer has long-term experience in the ethanol business, which will be very positive to the ethanol industry in Indonesia. We hope to complete it [the divestment] this year,” Imron said in a text message on
Shares in Medco, which are traded on the IDX under a code MEDC, were closed at Rp 2,575 apiece last Friday, a 1.9 percent drop compared to a day earlier.
— JP/Raras Cahyafitri