Foreign firms show interest in PGN
Foreign firms show interest in PGN
JAKARTA (JP): At least 30 foreign gas companies have shown
interest in buying part of state gas company Perusahaan Gas
Negara's (PGN) shares, PGN president A. Qoyum Tjandranegara has
said.
Qoyum said Monday that the foreign companies included El Paso
Energy International and Enron, both of the United States, Osaka
Gas of Japan and Gas Le Franc of France.
However, he said the companies had not made a firm commitment
due to uncertainty over PGN's rights in the sale of gas in the
domestic market.
They wanted the government to issue a special ruling to
clarify the mechanism in the sale of gas in the country, Qoyum
said.
PGN plans to divest 25 percent of its shares to one or two
interested companies through direct placement to raise funds for
its future expansion.
Qoyum said investors were confused about Indonesian laws which
on one hand provided state-owned Pertamina with the sole right to
explore, produce and transmit gas in the country, but also
allowed PGN to carry out transmission and distribution
activities.
Pertamina was awarded the sole right to explore, produce, and
transmit oil and gas in the country under Law No. 8/1971 and Law
No. 44/1990. Under the Indonesian legal system, the laws
supersede a 1994 government regulation which allows PGN to sell
gas to corporate and household buyers.
"Investors want a clear rule of the game. They don't want to
put their money into a company if they are not assured of the
prospects of the company," company finance director WMP
Simandjuntak said. He said investors wanted monopolistic
practices in gas to be eliminated.
Qoyum said the Ministry of Mines and Energy had drafted a
presidential decree on gas transmission and distribution which
would guarantee PGN's right to transmit and distribute gas in the
country.
A presidential decree ranks higher than a government
regulation, but lower than a law under the Indonesian legal
system.
"The presidential decree is a kind of bridge leading to a
change in the existing oil and gas laws," Qoyum said. He said a
presidential decree would be strong enough to convince investors
about PGN's gas distribution right.
Qoyum expected the government would put the presidential
decree on gas transmission and distribution into effect this
year.
"Once the decree goes into effect, we will make our stake
available for bidding to interested investors," he said.
Qoyum said PGN's divestment plan was part of requirements set
by its creditors -- the Asian Development Bank, JEXIM and the
European Investment Bank -- when they provided a US$590 million
loan to the company in 1995 to finance the development of a gas
pipeline linking Gersik, Duri and Batam in the southern part of
Sumatra.
The 944-kilometer pipeline is under construction.
"We were requested by creditors to invite foreign investors to
fund our expansion," Qoyum said.
PGN has yet to release its 1997 financial statement but
earlier estimated its profits increased 32 percent to Rp 103
billion ($10.3 million) last year, while assets increased 68
percent to Rp 1.1 trillion. (jsk)
JAKARTA (JP): At least 30 foreign gas companies have shown
interest in buying part of state gas company Perusahaan Gas
Negara's (PGN) shares, PGN president A. Qoyum Tjandranegara has
said.
Qoyum said Monday that the foreign companies included El Paso
Energy International and Enron, both of the United States, Osaka
Gas of Japan and Gas Le Franc of France.
However, he said the companies had not made a firm commitment
due to uncertainty over PGN's rights in the sale of gas in the
domestic market.
They wanted the government to issue a special ruling to
clarify the mechanism in the sale of gas in the country, Qoyum
said.
PGN plans to divest 25 percent of its shares to one or two
interested companies through direct placement to raise funds for
its future expansion.
Qoyum said investors were confused about Indonesian laws which
on one hand provided state-owned Pertamina with the sole right to
explore, produce and transmit gas in the country, but also
allowed PGN to carry out transmission and distribution
activities.
Pertamina was awarded the sole right to explore, produce, and
transmit oil and gas in the country under Law No. 8/1971 and Law
No. 44/1990. Under the Indonesian legal system, the laws
supersede a 1994 government regulation which allows PGN to sell
gas to corporate and household buyers.
"Investors want a clear rule of the game. They don't want to
put their money into a company if they are not assured of the
prospects of the company," company finance director WMP
Simandjuntak said. He said investors wanted monopolistic
practices in gas to be eliminated.
Qoyum said the Ministry of Mines and Energy had drafted a
presidential decree on gas transmission and distribution which
would guarantee PGN's right to transmit and distribute gas in the
country.
A presidential decree ranks higher than a government
regulation, but lower than a law under the Indonesian legal
system.
"The presidential decree is a kind of bridge leading to a
change in the existing oil and gas laws," Qoyum said. He said a
presidential decree would be strong enough to convince investors
about PGN's gas distribution right.
Qoyum expected the government would put the presidential
decree on gas transmission and distribution into effect this
year.
"Once the decree goes into effect, we will make our stake
available for bidding to interested investors," he said.
Qoyum said PGN's divestment plan was part of requirements set
by its creditors -- the Asian Development Bank, JEXIM and the
European Investment Bank -- when they provided a US$590 million
loan to the company in 1995 to finance the development of a gas
pipeline linking Gersik, Duri and Batam in the southern part of
Sumatra.
The 944-kilometer pipeline is under construction.
"We were requested by creditors to invite foreign investors to
fund our expansion," Qoyum said.
PGN has yet to release its 1997 financial statement but
earlier estimated its profits increased 32 percent to Rp 103
billion ($10.3 million) last year, while assets increased 68
percent to Rp 1.1 trillion. (jsk)