KUCHING, June 27 (Bernama) -- The Assar Senari palm oil refinery here isexpected to save transportation cost of nearly RM20 million annually formore than 18,000 smallholders, commercial planters and millers in SouthernSarawak once it is operational by October next year.

Chief Minister Tan Sri Abdul Taib Mahmud said here Monday that theconstruction of the refinery, together with the adjacent independent OilTerminal (IOT) at an estimated total cost of RM300 million, is part ofKuching city's development master plan.

"This saving (on transportation) is derived from comparison with thecurrent practice of sending crude palm oil and palm kernel to similarfacilities of nearly 700km away in Bintulu," he said when witnessing theIOT and refinery award and funding agreements signing ceremony herebetween Assar Senari group of companies with RHB Group.

The IOT project's main construction package was awarded to the successfulbidder, Chiyoda/PPES Works joint venture.

Chiyoda (Malaysia) is a member of Japanese conglomerate, ChiyodaCorporation, a global engineering company specialising in hydrocarbon andchemicals industry.

Its joint venture partner, PPES Works (Sarawak) Sdn Bhd, is a leadingSarawak-based construction company and a member of the Cahyamata SarawakGroup of Companies.

The refinery project is being undertaken in collaboration with its projectpartners -- Cargill and Sarawak Land Consolidation & RehabilitationAuthority (Salcra) -- while the IOT is with Petronas and Shell.

As part of the infrastructure requirement, Assar Senari in collaborationwith Kuching Port Authority is constructing an oil and gas jetty, which isexpected to be completed in August this year to serve the two main plants.

On the IOT project, Abdul Taib said that it was in line with the plan torelocate the existing petroleum terminal facilities from Bintawa here to amore suitable place, adjacent to the Kuching deep water port at Senari.

The location could contribute positively to the environment, safety andwell-being of residents at the surrounding areas, he said.

At the signing, RHB Group, the country's third largest financial servicesgroup, was represented by RHB Sakura Merchant Bankers Bhd, RHB Bank Bhdand RHB Islamic Bank Bhd, which raised financing for both projects,including a RM150 million-funding through the Islamic bonds.

Assar Senari group was represented by its chief executive officer (CEO)Syeed Mohd Wan Abdul Rahman while Chiyoda/PPES Works JV by ChiyodaMalaysia managing director Masatake Shinsenji and PPES executive directorJamel Ibrahim.

The RHB Sakura was represented by its chairman Abdullah Mat Noh, RHB Bankby its CEO Michael J. Barret and RHB Islamic Bank by its chairman VaseeharHassan Abdul Razack.

Malaysian Rating Corporation Bhd (MARC) CEO Mohd Asri Awang also presentedthe AAAs rating plaque for the "Sukuk" to part finance the project underthe Islamic asset-based financing contract to Assar Group of Companieschairman Tan Sri Bujang Mohd Nor.

-- BERNAMA