EXCLUSIVE - Japan "okays" loan for PGN's South Sumatra-West Java pipeline project

President of state-owned gas distribution company PGN Qoyum A. Tjandranegara said the Japanese government had given the greenlight that it would provide loans to finance the company's gas pipeline project linking South Sumatra to West Java.

Qoyum told Petromindo.Com on Wednesday that Japanese government had given "oral" assurance that the Special Yen loan would be disbursed next year.

"There is not yet any official statement that that they (the Japanese government) will disburse the loan. But, orally, they have told us the loan will be disbursed next year," Qoyum said on the sidelines of the Indonesian Engineer Association's meeting. The Japanese government has launched several loan packages, including the so-called Special Yen loan, to help the Asian countries, which had been battered by the economic crisis, continue infrastructure projects amid the economic crisis.

Indonesia had proposed a number of projects to be financed by the Special Yen loan, but Qoyum said the Japanese government was only interested in PGN's gas pipeline project and the double-track railway project in Jakarta and its surrounding areas.

PGN has planned to build a pipeline network to transmit natural gas from Central Sumatra and South Sumatra to the province of West Java to meet the gas demands of industries, power plants and households in the province.

Qoyum earlier said the project was worth US$850 million, 15 percent of which would be provided by PGN with the remaining 85 percent to be covered by the Special Yen loan. (Lia KS)