Major gas pipeline project hits by financing uncertainty

The major gas pipeline project of the state-owned gas distribution company PGN that would allow the distribution of gas from South Sumatra to the industrial area of West Java has been hit by financing uncertainty, PGN president Qoyum Tjandranegara told press.

Qoyum said until now not a single financing institution was willing to cover the bulk of the investment cost.

?We have just traveled around Europe, but we only obtained 11 percent of the needed funds or around US$100 million from the Netherlands. While Italy and France have not yet responded,? Qoyum said.

PGN initially planned to start developing the gas pipeline in 2002. The funding was initially expected to come from Japan?s Jebic of more than $900 million.

?But because talks between Indonesia and Japan at the Paris Club (of creditor nations) have not yet completed, the funding can not be disbursed yet, although they claim that they?re still interested in the project,? Qoyum said.(*)