Gas Negara to issue $100m convertible bonds
Gas Negara to issue $100m convertible bonds
JAKARTA (JP): State-owned PT Perusahaan Gas Negara (PGN) will
issue convertible bonds worth US$100 million to help finance an
820-kilometer pipeline project in Sumatra.
The company's president, Qoyum Tjandranegara, told a hearing
with the House of Representatives' energy, mining and
manufacturing commission yesterday that the bonds will be issued
with no options, meaning that all bonds will be converted into
equity upon maturity.
The Singapore office of London-based Roschild has been chosen
to become the sole candidate for arranging the bond issue, Qoyum
said.
He said the bonds will be offered to a limited number of gas-
related companies, which will become PGN's strategic partners.
So far over 10 foreign companies have expressed interest in
buying the bonds, he added.
They include Trans Canada, Nova Corp. and West Coast Energy
from Canada, British Gas of Britain, El Paso, Enron and Tenneco
of the United States, Osaka Gas and Tokyo Gas of Japan, Tractabel
of Belgium, Gas du France of France and Ital Gas of Italy.
Qoyum said his company will soon select strategic partners
from the interested companies. The strategic partners will be
required to buy the convertible bonds and become shareholders in
a new company to be set up to manage the planned 820-kilometer
pipeline.
He explained that the total cost for the pipeline project will
be US$590 million, of which $218 million will come from the Asian
Development Bank, $195 million from the Japan Export Import Bank,
$59 million from the European Investment Bank, $18 million from
PGN and $100 million from the bond issuance.
The project will comprise a 540-kilometer onshore pipeline
spanning from Asamera in South Sumatra to Duri in Riau and a 280-
kilometer offshore pipeline from Duri to Batam, also in Riau.
Surveys on the pipeline routes have been completed, and the
land acquisition along the routes will be completed in May.
The construction of the pipelines will start in July and is
expected to be completed by October 1997 for the Asamera-Duri
pipeline and by May 1998 for the Duri-Batam pipeline.
Qoyum said PGN has secured the markets for the 350 million
standard cubic feet per day (SCFD) of gas, delivery of which will
be piped from Asamera to Duri and Batam. Oil firm PT Caltex
Pacific Indonesia in Duri and Brighton Ltd. in Batam will be its
biggest customers.
PGN recently signed a 20-year agreement worth US$1.3 billion
with Brighton to supply 60 million SCFD to Brighton's 600-
megawatt steam power project in Batam.
In addition to the Asamera-Duri-Batam pipeline, PGN will also
build a 400-kilometer pipeline from Asamera to Cilegon in West
Java, the construction of which will be completed in 2000. The
Asamera-Cilegon pipeline will transport 250 million SCFD of gas
from Asamera to Cilegon.
The Asamera-Cilegon pipeline, which will cost $475 million,
will be financially supported by the World Bank, the European
Investment Bank and the Japan Export Import Bank.
The two projects are part of the planned Indonesian integrated
gas pipeline system, which will span over 2,000 kilometers from
Batam to Porong in East Java, with completion scheduled by 2006.
W.P. Simanjuntak, PGN's financial director, said his company
is only a gas distributor, not a gas producer. It buys gas from
state-own oil firm Pertamina and its contractors at between
US$1.50 and $2.85 per million British thermal units (BTU) and
then resells it for between $3.60 and $3.70 per million BTU.
"We manage to take a profit margin of between 50 cents and 60
cents per million BTU," Simanjuntak told The Jakarta Post.
PGN booked a before-tax profit of Rp 111.5 billion ($50
million) last year, up from Rp 82.6 billion in 1994. It recorded
total assets of Rp 494.99 billion as of last December, up from Rp
413.29 billion as of the end of 1994. (rid)