Tue, 16 Dec 2003

PGN to issue $500 million in bonds next year: Official

The Jakarta Post, Jakarta

State-owned gas utility company PT Perusahaan Gas Negara (PGN) has said it plans to issue bonds worth US$500 million next year to help finance its gas pipeline projects.

PGN president WMP Simandjuntak told a media conference on Monday that $100 million would be issued in the first quarter of the year.

"The (other) $400 million could be issued in two phases -- in 2004 and 2005 -- or all in one year. It depends on the company's needs," Simandjuntak said after a ceremony to mark the company's debut on the Jakarta Stock Exchange.

The proceeds from bond issuance will be used to finance pipeline projects from South Sumatra to West Java and from South Sumatra to North Sumatra.

Simandjuntak said that the $100 million bond issue plan was actually part of the $250 million issue originally planned for August. However, due to the J.W. Marriott bombing blast in Jakarta, which affected investor appetite, the company scaled down the size of the issue to $150 million.

PGN recently sold a 30 percent shareholding through an initial public offering (IPO) at a price of Rp 1,500 per share, raising around Rp 1.9 trillion in proceeds (US$224.85 million). Some Rp 1.1 trillion of the total proceeds will go to PGN, while the remainder will be taken by the government to help finance this year's state budget. The PGN IPO was oversubscribed more than eight times. The company listed on Monday some 4.32 billion shares on the Jakarta stock market.

Daniel F. Iskandar, managing director and head of investment banking at underwriter PT Danareksa Sekuritas, said buyers of the PGN shares were dominated by foreign investors, which made up 75 percent of the total. The remaining 25 percent were local investors.

Most, or 93 percent, were institutional while a mere 7 percent were retail buyers.

The PGN stock market debut helped push the stock exchange index higher on Monday. The Jakarta Stock Exchange main index ended up 1.782 or 0.3 percent at 658.522 from the previous close of 651.672. The volume of shares traded was 1.4 billion shares, valued at Rp 1.2 trillion.

However, PGN shares ended lower at Rp 1,550 from a midday high of Rp 1,750.

In the media conference the company also revealed several projects that would help boost revenue by 15 percent next year from the Rp 3.6 trillion to Rp 3.8 trillion estimated for this year.

PGN finance director Joko Pramono said the projects included gas transmission from Batam to Singapore, and gas distribution to Riau province, Pekanbaru city, Jambi, Palembang and Lampung.

"The projects will bring an additional 150 million standard cubic feet of gas per day (MMSCFD). It will boost our revenue significantly," Joko said.

Most of the natural gas, Joko said, would be used by the pulp and paper industry in Riau and Jambi, small to medium enterprises as well as household consumers.

Joko said the company also expected additional natural gas supply from PT Lapindo Brantas in East Java and BP Muara Karang in West Java, each amounting to 20 MMSCFD.

The company hopes to post strong growth in the next two years when some of the projects go online in 2006.

The company will also complete transmission of natural gas from gas fields operated by state oil and gas firm PT Pertamina in Prabumulih, South Sumatra, to industrial customers in West Java.

In 2006, PGN will start transmitting 400 MMSCFD of gas for power plants operated by state power firm PT PLN, namely Muara Karang, Muara Tawar and Tanjung Priok, in a bid to tackle power shortages in West Java.

In the same year, PGN expects to complete construction of a 400-kilometer gas transmission pipeline from Duri-Dumai to Medan, North Sumatra, as a replacement fuel for power plants.