PGN tries to obtain $200 - $300 million loan from foreign banks

State-owned gas utility company PT Perusahaan Gas Negara (PGN) is trying to obtain a US$200 million to $300 million loan from two foreign banks to finance its projects in 2004, Koran Tempo newspaper reported on Friday.

?We are negotiating with two giant foreign banks,? PGN?s president director W.M.P. Simanjuntak told reporters in Jakarta on Thursday.

Though Simanjuntak didn?t reveal neither the names of the banks nor their countries of origin, but he indicated that the two banks were from Asia. He also didn?t want to mention exactly how much PGN want to borrow from the banks.

?It can be $200 million or $300 million?? he said.

As far as the interest rate is concerned, Simanjuntak said PGN?s management is trying for minimal interest rate, which is equivalent to its dollar bond rate of 7.5 percent.

?Loan?s interest rate will certainly not be higher than the dollar bond?s rate,? he said. ?If not, why should we borrow from the bank?.

He hoped that PGN would get the loan in February 2004. ?If we don?t get (by February), we will cancel it (the loan),? he said.

PGN, according to Simanjuntak, wants to obtain this loan as a precautionary measure in case its initial public offering (IPO), which is planned for December, could not reach its target.

The gas utility company plans to raise up to Rp 3.6 trillion or about US$400 million from the sales of its 30 percent stake during the initial public offering (IPO). It also plans to issue another dollar bond of around $100 million to $150 million next year. But the amount will depend on the success of its IPO. In addition, PGN has also prepared another $100 million from its internal sources.

PGN needs huge amount of investment to complete several gas pipeline projects like Grissik-Pagar Dewa in South Sumatra, Duri (Riau)-Belawan (North Sumatra) pipelines and another pipeline from Riau to Singapore. (*)