PGN to start Kalimantan-East Java gas pipeline in 2006

The state owned gas company PT Perusahaan Gas Negara (PGN) is scheduled to commence its inter-island gas pipeline linking East Kalimantan and East Java in August 2006, Investor Daily reported on Monday.

PGN's president director W.M.P Simanjuntak said in Jakarta on Saturday negotiations on the US$1.1 million technical assistance that would be financed by the Asian Development Bank (ADB) would be completed next month.

"ADB has agreed to finance the technical assistance. The bank's team will visit Indonesia next month to complete the negotiations," he was quoted as saying by the daily. The agreement on the technical assistance would pave the way for PGN to begin the pipeline project in the middle of 2006 according to the initial schedule.

PGN earlier said that the World Bank and ADB had agreed to provide between US$400 million and $500 million for the project that would totally cost about $1.1 billion. PGN would use its own fund of about $350 million for the project, while the remaining funds would be provided by a consortium, which would build the inter-island pipeline project. (*)