Hefty dividends payment will not disrupt business: PGN

Ika Krismantari ,  The Jakarta Post ,  Jakarta   |  Wed, 06/24/2009 11:27 AM  |  Business

State gas distributor PT Perusahaan Gas Negara (PGN) decided Tuesday its annual dividends payments would exceed last year's net profits, but vowed it would not disrupt business performance.

PGN's annual shareholders' meeting approved a dividends payment of Rp 1 trillion (US$97 million), or about Rp 41.74 per share, a greater amount than last year's net profit of Rp 633.8 billion.

Hendi Prio Santoso, president director of the publicly listed company, said the move would not hamper the company's planned expansion scheduled for this year, because it was supported by a strong cash reserve position.

As of December 2008, PGN's cash reserves stood at $530 billion, of which $242.5 billion was derived from profits from previous years.

Hendi said the government, the majority shareholder in the company, said as the gas distributor was enjoying financial stability it could make a large dividends payment to its stakeholders.

The government currently controls a majority 56.46 percent stake in PGN.

"It *the dividend payment* will not disrupt our capex *capital expenditure* plan," Hendi said.

PGN Finance director, M Riza Pahlevi Tabrani, said the company was still committed to spending $250 million in capital expenditure this year.

"We will use the money to construct distribution pipes in West Java and as carryover payments for the SSWJ *South Sumatra-West Java* pipes, which we have just been completed. We will also use the funds for maintenance," he said.

PGN operates more than 2,100 kilometers of gas transmission pipelines and several distribution outlets capable of storing 1.005 MMSCFD (million cubic feet per day) of gas across the nation.

In addition to its strong cash position, the company has also secured loans aimed at partly financing the new West Java pipe project.

"Forty percent of the capex funds come from loans secured from the World Bank and JBIC *Japan Bank for International Cooperation*," he said.

The company hopes to complete the construction of the West Java distribution pipes, which are expected to generate an additional 800 million MMSCFD in gas supply, by the end of the year as targeted.

The company has experienced healthy business conditions in the first quarter of this year, with net profit soaring 114 percent to Rp 1.2 trillion on the back of a higher volume of sales.

During that period, the company managed to sell 721 MMSCFD of gas, higher than the 527 MMSCFD sold a year earlier.

In terms of its full-year performance, PGN hopes to achieve a 20 percent increase in currently revenue levels by the year's end.

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