Release: S&P: PGN unaffected by pipeline project delay

SSINGAPORE (Standard & Poor's) Jan. 16, 2007--Standard & Poor's Ratings Services said today that its rating and outlook on the Indonesian government-owned gas utility, PT Perusahaan Gas Negara (Persero) Tbk (PGN; B+/Positive/--) are not affected by a delay in the completion of a gas pipeline project from South Sumatera to West Java at this stage.

As a result, the project's two phases are expected to be operational in March 2007 and July 2007, instead of December 2006 as previously expected. This delay is not expected to have a material effect on expected cash flows arising from the completion of these new pipelines, if they become operational as currently planned.

Nevertheless, if there is a further delay to these key gas transmission lines, the outlook or the rating for PGN could come under downward pressure, specifically as PGN is likely to increase its debt for funding capacity expansions. SSWJ1 and SSWJ2 are two important pipeline projects for PGN, which plans to tap into the major industrial area of West Java, and are expected to improve the company's financial profile through higher gas transmission and distribution sales revenue over the near to medium term.(end of release)