PGN expects to raise US$80 million from WB

State owned gas transmission and distribution company Perusahaan Gas Negara (PGN) expects to raise soft loans amounting to US$80 million from the World Bank to partly finance its gas pipeline network in Java, Suara Karya reported on Saturday.

PGN president director WMP Simandjuntak said on Friday that the soft loan would be the second stage of loan disbursement from the World Bank for the planned pipeline project.

"The first stage of the soft loan amounting to US$6 million has been disbursed to finance the technical assessment of the project and the company's initial public offering (IPO) plan," he said. PGN expects to sell about 30 percent of its shares during the IPO, which would be launched this month or next month.

The pipeline project, which would be commenced next year, would be used to transmit gas from South Sumatra. The South Sumatra-West Java pipeline project is now under construction and it is expected to be able to supply gas of between 600 and 1,000 million standard cubic feet per day (MMSCFD).

The South Sumatra-West Java gas pipeline project will cost about US$486 million. Japan Bank for International Cooperation (JBIC) is expected to provide soft loan of about US$415 million to partly finance the project.

To meet a continued increase in the gas demand in Java, PGN also plans to build a 1,100 km-pipeline linking East Java and East Kalimantan. The pipeline project, which will be able to transmit gas of between 700 and 1,000 MMSCFD will be started between 2005 and 2007. (*)