Perusahaan Gas Negara awaits details of IPO plan

State owned gas distributor PT Perusahaan Gas Negara is waiting for the details of the company?s initial public offering (IPO) plan, that will be used as the guideline for the launching of the IPO by the end of this month, Bisnis Indonesia reported on Wednesday.

PGN?s Finance Director Djoko Pramono said in Jakarta on Tuesday that the privatization committee which would comprise the company?s senior executives and senior officials at the office of the State Minister for Supervision of State Enterprises would soon be established to formulate the IPO formula.

"The team will assess the percentage of the shares that would be sold during the IPO. The assessment will be based on the ideal amount of funds that will be needed by both the government and the company from the IPO," he was quoted as saying.

According to an initial plan, PGN will sell between 25 percent and 30 percent of its shares, comprising of the government?s shares and new shares. Proceeds from the sale of the government?s shares will be used to finance the state deficit while those from the sale of the new shares will be used to finance PGN?s pipeline network expansion plan in East Java, West Java and East Kalimantan.

"Funds from the sales of the new shares will be partly used to finance the development of the South Sumatra-West Java gas pipeline project which will cost about US$485 million. About 85 percent of the funding will be financed by a loan from Japanese banks," he added.

According to earlier reports, the expansion of PGN?s pipeline network expansion in East Java, West Java and East Kalimantan will cost the company about US$1.7 billion. (*)