PGN seeks new loan to finance pipeline project

State owned gas distributor PT Perusahaan Gas Negara (PGN) is seeking new commercial loans as additional funds to finance the expansion of the company's gas pipeline network, Investor reported on Tuesday.

PGN?s president director W.M.P Simandjuntak said in Jakarta on Monday that the additional funds were needed because the proceeds from the recent issuance of the company's bonds -- Eurobond I and Eurobond II - did not meet the initial target.

He said that PGN only received US$125 million from the issuance of the Eurobond II, lower than the company's initial target of $150 million, while from the Eurobond I the company only raised about US$150 million, far lower than the target of $250 million.

"We therefore need additional funds of at least $225 million to finance the pipeline project which would require a total cost of about $500 million," Simandjuntak said. But he declined to unveil from which banks the company planned to raise the fresh loans.

According to him, the larger part of the funds would be used to finance the development of the 450-km pipeline project linking Duri in Riau to Medan in North Sumatra. This project, which is scheduled for completion in 2005, will cost the company about US$217 million to build.

The Duri-Medan pipeline will be part of the company's pipeline projects, which will require a total cost of US$1.28 billion. The projects also include the construction of the Grissik-Pagardewa track which will cost US$504 million. (*)