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PGN expects robust sales in 2009 on demand from power producers
State gas distributor PT Perusahaan Gas Negara (PGN) expects sales to grow by 33 percent next year on rising demand from power producers
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State gas distributor PT Perusahaan Gas Negara (PGN) expects sales to grow by 33 percent next year on rising demand from power producers.
Sales volume is expected in 2009 to increase to between 700 and 800 million cubic feet per day (MMScfd), up from 600 MMScfd forecast for the end of this year, PGN president director Hendi Prio Santoso told reporters Wednesday.
"Demand from power producers is very high. If we can manage to fulfill this demand we are optimistic for next year, despite the crisis," Hendi said.
"But, we need further evaluation to examine how big the crisis will impact upon the industry and how long it will last," he said, adding that in the meantime PGN would focus on meeting demand from power producers -- its biggest customers.
Currently, PGN hold contracts to supply 260 MMScfd to power producers.
Despite the forecast growth in demand, Hendi said PGN would probably not increase its gas price. "We may maintain current price levels, unless we receive new gas supplies at higher cost."
PGN currently sells gas at an average price of $5.5 per million British thermal units (mmbtu) and buys gas at a price of $3.9 per mmbtu.
Riza Pahlevi Tabrani, PGN finance director, said capital expenditure for next year could reach $200 million financed by a mixture of internal budget and loans, the latter mostly from the Japanese Bank for International Cooperation and the World Bank.
"Most of it will be used to develop the pipeline transmission network," Riza said. PGN finished 1035 kilometers of transmission and distribution pipelines in August this year. The pipeline system has a total capacity of 970 MMScfd.
PGN is one of the state enterprises obliged by the government to buy back their shares to benefit from the large fall in stock prices to help improve liquidity.
Hendi said PGN has so far only spent Rp 2.5 billion buying back its shares from Rp 400 billion allocated for that purpose.
PGN booked Rp 2.04 trillion in net profits in the third quarter this year, up 56.8 percent from Rp 1.30 trillion in the same period last year.
