The Arsari Group, a company owned by Hashim Djojohadikusumo, the brother of Defence Minister Prabowo Subianto, is developing biorefinery projects in East Kalimantan province, close to the upcoming Indonesian capital.
Seeking funds from foreign investors and development banks
Djojohadikusumo said that the company intends to build a biorefinery based on technology from Lanzatech, an American firm that produces sustainable biofuels. “I am working with them as a technology provider. I have given them the mandate to design a biorefinery,” Djojohadikusumo told a news conference on Feb. 8, 2022. The refinery and torrefaction facility is estimated to produce 340,000 tons of bio-coal every year. A biomass facility will be set up for processing old and reclaimed wood and branches bush into biofuels.
In addition to the bio coal-manufacturing facility, the Arsari Group also plans to build two biorefineries in Sumatra and East Kalimantan that will be used to produce sustainable aviation fuels from sugar palm, cassava and other natural sources.
As a result of the project, the company is expected to spend between US$200 million and US$350 million. The Arsari Group seeks funds from foreign investors, export credit agencies, xc and the Indonesian stock exchange to finance the project. “We have spoken with investors from Europe, Southeast Asia and the United States. We plan to do a private placement and to list in Jakarta. We are considering listing in America and Europe to fund our long-term projects in Africa, India and other parts of the world,” says Djojohadikusumo.
Clean water facility in the new capital of Indonesia
Besides the biorefinery, Arsari Group plans to construct a clean water facility to provide clean water to the cities, industries and the new capital of Indonesia.
According to Djojohadikusumo, the upcoming clean water facility will supply about eight and a half cubic meters of water every second to several cities around the area, such as Samarinda, Balikpapan and Tenggarong as well as Pertamina’s recently built refinery. The cost of the clean water facility was estimated to be between US$300 million and US$330 million, according to a study conducted by Witteveen-Bos in 2016 and 2017.
“The most crucial part of this project is the pipe. The farther the customer is from the water source, the costlier the project will be,” said Djojohadikusumo, adding that his firm is also exploring the possibility of raising capital from the stock exchange and foreign investors. There have been five investors interested so far.
As of now, Djojohadikusumo said his company had not begun building the facility because it is still waiting for direction from the government regarding negotiations and off-take agreements. The government is in the process of drafting several regulations that are mandated by the revised capital law that was passed on Jan. 18, 2022.
No political agreement
Penajam Paser, in East Kalimantan province, has been nominated by the Jokowi administration as the future capital of Indonesia, which has created controversy among the Indonesian public. In a recent statement, activists and public intellectuals suggested that the decision to pick this area was a political deal involving Jokowi and other members of the Indonesian political and business elite, including Hashim Djojohadikusumo, the brother of the Indonesian defence minister Prabowo.
Djojohadikusumo denies such an opinion, declaring that the projects he was planning, the biorefinery and the clean water facility, had been planned before the government announced the area as the capital’s location. He testified that he purchased a plot of land in East Kalimantan with Forest Concession Rights in 2007. There were 265,000 hectares of land and 450 hectares of land near a jetty in this plot.
In 2014, Djojohadikusumo company released around 93,000 lands to the community and government without compensation. As early as 2015 and 2016, Arsari Group started feasibility studies and designed biorefineries and clean water facilities projects.
“There is no political agreement; no projects are being shared. I had already planned my project long before the nation’s capital was established,” he explained, adding that he was in France when his son called him and informed him that the government had appointed the area near his land and projects as the nation’s capital.
