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State gas company PT PGN has blamed a six-month delay in the
opening of a key US$1.1 billion pipeline -- which sent its shares
tumbling by 23 percent last week -- on management and technical
problems.
The pipeline will span a total of 1,106 kilometers and link South
Sumatra and West Java, and have the capacity to transport 1,000 million
standard cubic feet per day (mmscfd) of gas. It was originally
scheduled to open in December.
PGN's shares fell 23.3 percent last week to Rp 7,400 (US$0.81) from Rp
9,650.
"We should have realized there would be a delay earlier, but because of
the explosion the directors, who were appointed in mid-November, were
focused on that," PGN president director Sutikno said Sunday.
The explosion he was referring to involved a PGN gas pipeline in
Sidoardjo, East Java, the site of the mudflow disaster.
It was not until the middle of December that the directors started
analyzing the problems hindering the gas pipeline project, he said.
"We released a statement about the delay on Jan. 11, after we reached a
final conclusion on how long the project would be delayed," Sutikno
said.
He denied there was any effort on the part of the management to try and
cover up the delay.
PGN director for development Adil Abbas said another problem facing the
project was the issue of land clearance.
As a result of the delay in the opening of the pipeline, PGN revised
down its gas production target for this year to 555 mmscfd from 787
mmscfd.
For 2007, PGN has set aside $517.11 million for a number of different
projects, including gas pipelines linking Duri in South Sumatra, Dumai
in Riau and Medan in North Sumatra.
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