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)