PGN, ADB finalizing $225 million loan for pipeline project completion

State-owned gas distributor PT PGN is finalizing a commercial loan agreement worth US$225 million with a consortium led by the Asian Development Bank (ADB) for the completion of Sumatra-Java gas transmission pipeline project and its distribution network.

PGN said in a statement on Thursday that the contributors of the loan are ADB, ING Group, KfW Bankengruppe and Islamic Development Bank (IDB).

PGN said IDB had committed to providing a total of $65 million under a syariah scheme but it would require a further negotiation separately. Meanwhile, other contributors are principally ready to disburse the loan starting next month (October).

ADB approved of a direct loan of $75 million for PGN last month. The bank said it would also support loans of up to $125 million to PGN provided by other international financial institutions and commercial banks.

PGN also said International Finance Corporation (IFC) had offered a $50 million loan as an alternative source of fund.

PGN is scheduled to start delivering gas from state-owned oil firm Pertamina?s field in South Sumatra to West Java markets in November this year. Meanwhile, gas from ConocoPhillips' fields will be delivered starting March 2007. (Robert)