Bakrie to go ahead with East Kalimantan-Java gas pipeline project
Friday, December 15 2006 - 02:52 AM WIB
PT Bakrie & Brothers (B&B) president director Bobby Gafur Umar said that up till now PT Bakrie & Brothers has yet to receive official notice from the government regarding its plan to cancel the project.
Vice President Jusuf Kalla said Wednesday the government might cancel the East Kalimantan-Java gas pipeline project because, according to him, based on the result of a new study of the gas market in Java showed the project might not be necessary.
?We will run our program according to our proposal that we have submitted to downstream oil and gas regulator, BPH Migas. Under the program, B&B, in cooperation with BPH Migas and an integrated team, have already started to socialize the project to residents living in areas that will be affected by the pipeline project, such as in East and South Kalimantan and Central Java,? he said.
According to Bobby, Bakrie has been in talk intensively with several prospective local and overseas partners to explore the possibility of cooperating in technical construction in preparation for the planned gas pipeline construction project.
The company is now in talk with Ernest & Young (E&Y) on the possibilities of financing schemes for the project that will cost around US$1.26 billion, he said.
?We have started to talk with E&Y. There will be several possible financing schemes, such as project financing, vendor financing, EPC and turn key or with general financing scheme under the debt to equity ratio, with debt 70 percent and capital 30 percent,? he explained.
Based on the tender document proposed to BP Migas, four banks are ready to lend loan, including Deutsche Bank, Sumitomo Mitsui Banking Corp, Commerce International Merchant Bankers Berhad and Nizuho Corp Bank Ltd.
Bakrie has also signed a memorandum of Understanding (MoU) with foreign partners in this regard, such as Mitsui and Daewoo.
?Regarding the plan for gas distribution, we have also signed several MoU, either with direct buyers or with the gas traders,? Bobby said.
According to Investor daily, Bakrie has also signed a MoU with several companies that will take advantage of gas (channeled through the East Kalimantan-Java gas pipeline). They are PT Indonesia Power, with channeled gas of 300 million cubic feet per day (million standard cubic feet per day (mmscfd), PT Bayu Buana Gas (200 mmscfd), PT Indogas (400 mmscfd) PT bakrie Power (100 mmscfd), Petromas and Krakatau Steel.
Meanwhile, downstream oil and gas regulator?s BPH Migas committee member Hanggona T Nugroho said that BPH Migas has no authority to cancel the result of the tender for the privilege right to construct East Kalimantan-Java gas pipeline with Bakrie & Brothers as the winner. (*)