PLN needs govt liquidity guarantee to secure gas supply

State power company PLN has asked the government and Bank Indonesia (Central Bank) to provide a liquidity guarantee of Rp 5 trillion (US$=Rp8,830) to secure gas supply for its power plant in Grati, East Java.

PLN president director Eddie Widiono Suwondo said Monday that the liquidity guarantee was a condition set by Australian oil and gas firm Santos Limited under a contract to supply the latter's gas from the Oyong field in East Java to PLN's 700-megawatt power plant.

Santos Limited, through its wholly owned subsidiary Santos (Sampang) Pty Ltd early this year entered into a Head of Agreement with PLN?s PT Indonesia Power for the sale of the entire gas reserves of the off-shore Oyong field.

Santos had said previously that the first gas supplies from the Oyong field were expected to commence under the gas sales agreement in late 2004, with a minimum of 60 million cubic feet per day of gas being delivered to Grati. (godang)