The Jakarta Post, Jakarta
State-owned electricity company PLN has finally secured a Liquefied Natural Gas (LNG) supply from the LNG plant at Tangguh, Papua, after the government agreed to reallocate part of the supply already earmarked for the Sempra Energy to the electricity utility.
PLN power generation director Ali Herman Ibrahim said Thursday that the decision had been made during his meeting with the Upstream Oil and Gas Executive Agency (BP Migas) on Wednesday.
Herman told Detik.com that BP Migas had confirmed that PLN would receive a portion of the LNG supply previously allocated to the U.S. West Coast-based energy firm, Sempra Energy Corp.
It had been reported earlier that the government planned to divert the gas supply for Sempra to other energy firms in Asia, such as Tokyo Gas in Japan, Kogas, Posco and K-Power in South Korea, and the Taiwan-based Chinese Petroleum Corporation as these companies were likely to offer higher prices than that offered by Sempra.
Energy and Mineral Resources Minister Purnomo Yusgiantoro said recently that the government was investigating the possibility of diverting 50 percent of Sempra's gas supply, or about 1.75 million tons per year, to the Asian market.
The Tangguh LNG plant, located in a Papua gas field with proven reserves of more than 14 trillion cubic feet, is in the final phase of constructing the first two trains and is expected to commence initial production by the last quarter of 2008.
Meanwhile PLN said that it has sold Rp 3 trillion (US$332 million) of bonds and Islamic debt this week to finance its major network expansion projects.
The company sold Rp 1.5 trillion of 10-year bonds yielding 10.4 percent, and Rp 1.2 trillion of 15-year bonds yielding 10.9 percent, said Orias Petrus Moedak, managing director of PT Danareksa Sekuritas, which helped organize the sale.
The Jakarta-based utility also sold Rp 300 billion of 10-year Islamic bonds.
Indonesia's central bank has reduced borrowing costs by 4.25 percentage points in the past year, encouraging companies, including PLN, to sell bonds and expand.
Indonesian companies have sold Rp 14.9 trillion of debt this year, exceeding the Rp 11.36 trillion sold in the whole of last year, according to data compiled by Bloomberg.
PLN will use the proceeds to fund daily operations, including the purchase of fuel to generate electricity, the company has said.
Danareksa Sekuritas, PT Bahana Securities, PT Mandiri Sekuritas and PT Trimegah Securities are helping sell the bonds. The utility will complete the sale after getting approval from the capital market regulator, Moedak said.
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