PGN hopes to commence S. Sumatra-W. Java pipeline construction next year

State gas distribution firm PGN expects to ink loan agreement with Japan Bank for International Cooperation (JBIC) by the end of this year to enable the company to commence construction of pipeline that would flow natural gas from South Sumatra to West Java second quarter of next year, according to a company executive.

?We are waiting for the exchange of notes between the government of Indonesia and Japan, which will be followed-up with loan negotiation. I hope we could sign the loan agreement by the end of this year,? said WMP Simanjuntak, PGN president director on a sideline of a parliamentary hearing in Jakarta Thursday.

If PGN is able to commence construction second quarter 2003, he said, the project could become onstream as early as 2005.

The government of Japan through JIBC had agreed to provide US$ 415 million in special yen loan (SYL), which bears very low interest to finance the construction of 640-kilometer pipeline. The pipeline will transport 250 million standard cubic feet per day (MMCFD) of gas, ramping up to 700 MMCFD.

PGN needs about US$486 million to finance the construction of the gas transmission network, which will pass through Pagar Dewa in South Sumatera, Cilegon, and Cimanggis in Banten and West Java provinces. The project is part of the cooperation agreement between PGN and Pertamina in the distribution of gas in Java.

The project is planned to ease future natural gas shortage in West Java. Gas will be supplied from Pertamina?s gas fields in and other South Sumatra gas producers.(alex)