ADB provides $75m loan for PGN?s S. Sumatra-W. Java pipeline project

The Asian Development Bank (ADB) has approved a US$75 million loan to state-owned gas transmission and distribution PT PGN Tbk for the construction of a 661 km natural gas pipeline from South Sumatra to West Java Phase I (SSWJ Phase I).

ADB said in a statement that the loan would support loans of up to $125 million to PGN provided by other international financial institutions and commercial banks.

All the loans have no guarantee from the Indonesian government.

According to ADB, the $652.5 million project is one of the two being built by PGN to address a shortage of natural gas in West Java.

?This pipeline will promote clean energy, support economic growth in West Java and is also a strong endorsement of Indonesia?s sector reforms in the oil and gas sector,? Stephen N. Edwards, Structured Finance Specialist with ADB?s Private Sector Department, said in the statement.

The SSWJ Phase I is dedicated to transport natural gas from Pertamina?s gas field to PGN?s industrial customers in the western part of West Java. The project was initially expected to be completed by mid 2007.

Meanwhile, the SSWJ phase II is aimed to deliver gas from ConocoPhillips-operated Corridor gas block in South Sumatra to PGN?s industrial customers in the northern part of West Java. This project is scheduled to commence operation in November 2006. (Robert)