PGN plans $200m in capital spending for 2012

Padangekspres.net-Publicly listed gas distributor PT PGN (Persero) Tbk says it will allocate US$200 million for capital expenditures this year, principally for infrastructure for LNG (liquefied natural gas) receiving terminals.

“The projects are multiyear. For the LNG ones, we are hopeful that the one in West Java can start operating this year. As for the other one in North Sumatra, development will begin this year,” PGN investment planning and risk management chief Wahid Sutopo said on Monday.

The terminals will serve state-owned power company PLN’s gas-fired power plants in Muara Karang, West Java, and Belawan, North Sumatra.

“Their gas needs are still plentiful. We should be more focused on getting new supply to meet domestic demand,” he added.

Jobi Triananda, PGN’s technology and development director, said PGN would add another LNG receiving terminal in Lampung to meet demand from private-sector run gas-fired power plants, including that of Krakatau Steel.

“We hope to auction the [Lampung project] this year so that the project will be done by 2014 or 2015,” he said.

PGN has also expressed interest in acquiring gas blocks and building LNG terminals in various locations to develop its upstream business.

Indonesia, the world’s largest LNG exporter after Qatar and Malaysia, is increasing its domestic use of natural gas on a dwindling domestic oil supply.

Internal cash could cover the planned capital spending, thus eliminating the need for loans this year, according to Wahid. PGN’s cash position has almost tripled from 2008 to 2010 to Rp 11.1 trillion.

PGN, however, has secured a non-cash loan worth $130 million from major state-run lender PT Bank Rakyat Indonesia (Persero) Tbk, up from $96 million from last year, to ease gas purchases and which this year might be used to benefit its telecommunications unit, PT PGAS Telekomunikasi Nusantara.

Asmawi Syam, BRI’s director for institutional business, said: “The non-cash loan facility will be used by PGN to issue a SBLC [standby letter of credit] as a guarantee of payment for its suppliers.”

Wahid added that the SBLC would be a guarantee for to its gas supplier. “With that banking guarantee, we can meet our demand.”

PGN shares (PGAS) traded at Rp 3,200 on Monday, a 0.8 percent drop from the previous trading day. The company’s share price has stumbled 24.7 percent in the last one year, against the broader Jakarta Composite Index’s (JCI) 10.3 percent gain.

— JP/Esther Samboh