PGN hopes yen loan to be disbursed next month

The state-owned gas company PGN expects that a special yen loan worth US$415 million to help finance the construction of gas pipeline from South Sumatra to West Java can be disbursed in February.

PGN president WMP Simandjuntak said that the only remaining obstacle was from Canada questioning Japan?s decision to provide a low interest loan for a commercial operation.

Canada and Japan are both members of the OECD grouping of developed nations.

Simandjuntak said that the government of Indonesia and Japan were currently trying to explain the loan facility and the project to Canada.

The special low-interest loan would be provided by the Japan Bank for International Cooperation (JBIC).

The 40-year loan carries an interest rate of less than 1 percent with a 10-year grace period.

The construction of the $900 million gas pipeline will start in 2003.

The 640-km gas pipeline will allow the state-owned oil and gas firm Pertamina to transfer some 250 million standard cubic feet per day (MMCFD) gas for 20 years starting 2005 to West Java. The pipeline has the capacity to deliver 600 MMCFD. (Arry)