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PGN, IP ink gas contract worth Rp 1.7 trillion
Alfian , The Jakarta Post , Jakarta | Mon, 09/22/2008 12:42 PM | Business
To help secure power supply in West Java, state gas utility company PT Perusahaan Gas Negara (PGN) and electricity supplier PT Indonesia Power (IP) last week signed a gas sales contract worth Rp 1.7 trillion (US$181.24 million).
PGN's corporate secretary, Heri Yusup, said the deal would allow PGN to supply 30 million cubic feet of gas per day to IP's power plant in Tanjung Priok, North Jakarta, for the next three years.
"The gas is coming from South Sumatra and it will be supplied to Tanjung Priok power plant via the South Sumatra-West Java gas pipeline," Heri said in a statement.
PGN and IP will immediately build infrastructure and other facilities to support the gas distribution activity, he said.
"The gas delivery will begin as soon as the two firms complete the infrastructure project."
He said the deal was part of PGN's commitment to secure gas supply for power plants in West Java.
IP, which owns 127 power plants with a total capacity of 8,888 megawatts, is a subsidiary of state electricity firm PT PLN.
PLN has frequently declared it will boost its gas usage next year to reduce production costs. The state company will boost gas use at its power plants by 65,701 billion British thermal units (BBtu) in 2009, president director Fahmi Mochtar said on Sept. 15.
PLN expects this program to reduce its oil-based fuel consumption by 955,993 kiloliters per year, which would lighten the 2009 electricity subsidy by Rp 5.33 trillion.
Fahmi said the subsequent reduction in production costs would see PLN increase its profit from electricity sales by 7 percent.
PLN's gas consumption in 2008 is estimated to reach 211,648 BBtu. It plans to consume 258,783 BBtu of gas in 2009, with consumption expected to rise by 25.39 percent to 324,485 BBtu once the conversion to gas project has been completed.
To secure gas supply, PLN, together with PGN and state oil and gas Company PT Pertamina, will build a gas-receiving terminal worth US$500 on a 170-hectare plot in Bojonegara, Banten.
The terminal is expected to become operational in 2013, with construction set to begin next year.
