PT PGN to build 800-kilometer gas pipeline
PT PGN to build 800-kilometer gas pipeline
JAKARTA (JP): State-owned PT Perusahaan Gas Negara (PGN) is to
build an 800-km gas pipeline connecting the Asamera gas field in
Jambi province, Duri in Riau and Batam. It is expected to cost
US$600 million.
"We'll tender the construction of the pipeline soon. We've
already approved seven companies, both Indonesian and foreign, to
participate in the international tendering process. Hopefully, we
can announce the winning bidder next month," PGN's president,
Qoyum Tjandranegara, said yesterday.
Speaking to reporters after attending the signing ceremony of
a notarial document on the change in the legal status of the gas
company to a limited liability company with a commercial mission,
he said that the pipeline construction will start in November and
will be completed before the year 2000.
Qoyum said that PGN will finance $20 million of the total
investment, the Asian Development Bank will provide a soft loan
of $218 million, Japan Exim Bank $193 million, the European
Investment Bank $58 million, and strategic partners about $100
million. The loans will have an average interest rate of 6
percent.
"What's important is that we'll have a grace period of five
years for the loans," said Qoyum.
After completing the Asamera-Duri-Batam pipe network, Qoyum's
company will start the second transmission project outside Java
island from Asamera to Palembang, in southern Sumatra, and
Cilegon, in West Java. The second project will be also tendered
through international competitive bidding.
"For the second transmission project we'll need an investment
of $600 million," he said, adding that the World Bank is very
likely to provide a soft loan for the pipe construction.
He said that the construction of the Asamera-Palembang-Cilegon
gas pipeline, which is estimated to be about 500 km, will be
completed before the year 2005.
"This is part of our efforts to raise the domestic gas energy
consumption, which is still dominated by oil," he said.
Currently, he said, domestic gas consumption only accounts for
about two percent of the total energy consumption. "We hope that
in 10 years we can increase the gas contribution to about 20
percent," he noted.
He said that by increasing the use of gas Indonesia can
actually save foreign exchange.
Qoyum cited as an example the Duri Steam Flood (DSF) which
will use the gas distributed from the Asamera-Duri pipeline to
replace the oil it now uses. Until now the DSF uses between
40,000 to 60,000 barrels of oil per day.
"So if the DSF uses the gas, we can save at least $1 million
in foreign exchange a year ," he said.
Subsidiaries
Qoyum said the change in the legal status is part of the
company's preparations to go public in 1998.
He added that PGN would soon set up three subsidiaries, namely
PT Transmisi, PT Distribusi and PT Co-Generation.
According to him, PT Transmissi will specialize in piping gas
to distribution centers.
PT Distribusi will be in charge of distributing gas to
household and industrial users while PT Co-Generation will handle
the diversification of gas usage, including the development of
small scale gas-fired power plants, such as for high-rise
buildings.
"PT PGN will eventually function as a holding company dealing
only with investments and infrastructure developments," he noted.
He said that by changing their legal status, any private
company can now join the state company in the gas business. (13)