PGN to launch IPO in third quarter

State owned gas distribution company PT Perusahaan Gas Negara (PGN) expects to launch the company?s initial public offering (IPO) if its shares in the third quarter of this year, Finance Director Djoko Pramono said as reported by Bisnis Indonesia on Wednesday.

"As part of the IPO, a special team which will prepare the privatization will be established later this month," he was quoted as saying. He added besides selling the government?s shares, the company would also issue new shares during the IPO.

According to Djoko, proceeds from the government?s share divestment would be used to finance state budget, while those to be raised from the sale of new shares would be used by the company to partly finance the construction of a new gas pipeline linking South Sumatra and West Java.

He said that the new pipeline project would cost the company about US$485 million to build. About 85 percent of the funds needed for the construction of the project will be in the form of loans from Japanese banks.

PGN booked total revenues of about Rp 2/7 trillion last year. This year the total revenues are projected to decline to about Rp 2.5 trillion, partly due to the sale of the company?s 40 percent equity in PT Transportasi Gas Indonesia (Transgasindo) to Transasia Pipeline Company Pte Ltd for US$187.6 million.

The value of the acquisition includes a commitment to provide fresh fund of US$57.6 million for the construction of Transgasindo?s pipeline project which link Grissik in Jambi, Duri (Riau), Batam and Singapore. (*)