PGN gets $80m WB loan for pipes

PGN gets $80m WB loan for pipes

PT Perusahaan Gas Negara, Indonesia's state-owned gas distributor, will get a loan of about $80 million from the World Bank to partly fund pipelines in the western part of Java, Chief Financial Officer Joko Pramono said.

PGN, which has a gas distribution monopoly, expects to sign the loan agreement in October, Pramono told reporters. Construction of the pipelines, valued at $125 million, will begin next year, he said.

The company may sell bonds or obtain new loans to fund the rest of the project and another project valued at $280 million, to build pipelines linking Duri gas fields in southern Sumatra to cities in northern Sumatra, Pramono said.

PGN, which supplies gas to companies including state-owned power firm Perusahaan Listrik Negara and ceramic tiles maker PT Muliakeramik, has boosted sales by meeting demand for cheaper fuel after crude-oil prices surged to a record this year.

The company expects to double its profit by 2007 as gas sales will increase to 650 million cubic feet a day from 280 million currently, Pramono said.

"More people are turning to gas for fuel because it is cheaper than oil," he said.--Bloomberg