PGN plans bond issue next year
The Jakarta Post, Jakarta
State-owned gas utility company PT Perusahaan Gas Negara (PGN) plans to issue up to Rp 1.5 trillion (US$166 million) in bonds in the first quarter of next year to help finance its pipeline project linking gas-rich South Sumatra with the heavily populated West Java and Banten provinces.
PGN finance director Joko Pramono said the gas pipeline would cost around $188 million, of which some $80 million had been secured via a World Bank loan.
"We are seeking to issue between Rp 1 trillion and Rp 1.5 trillion in bonds in the first quarter of next year to finance the pipeline project to link cities in South Sumatra with those in West Java and Banten," said Joko during a ceremony on Monday.
Joko said that once the South Sumatra-West Java transmission pipeline was completed in 2006 or 2007, many industrial undertakings in West Java and Banten, the main industrial regions of the country, were expected to switch from oil to gas.
Currently, publicly listed PGN, which has a monopoly over the country's gas distribution, only serves six cities -- Medan, Palembang, Jakarta, Bogor, Cirebon and Surabaya.
It plans to boost gas supplies to Surabaya, the country's second largest city, from various fields offshore East Java, and to cities in North Sumatra from gas fields in Riau.
The company has said it expects to double its profit by 2007 as gas sales will increase to 650 million cubic feet a day from 280 million currently, as more people and undertakings turned to gas as it was cheaper than oil.
For the first nine months ending September, PGN's net profit fell 49 percent to Rp 263.9 billion, down from Rp 522.2 billion in the same period last year. The fall was due to foreign exchange losses and interest on the company's debts.
The company reported a foreign exchange loss of Rp 227.9 billion compared to a gain of Rp 78.5 billion. The cost of interest increased more than threefold to Rp 295.7 billion during the period compared to Rp 84.3 billion in the same nine month period the year before.
PGN's long-term debt stood at Rp 6.09 trillion at the end of September, up from Rp 3.87 trillion a year earlier.
The company's shares ended Rp 25 lower at Rp 1,350 on the Jakarta Stock Exchange on Monday.