Pertagas, PGN to merge pipeline networks

JAKARTA. State-owned energy giant Pertamina subsidiary Pertamina Gas (Pertagas) and state-owned gas company Perusahaan Gas Negara (PGN) are currently preparing their integration process, in particular the merging of their pipeline networks.

"Currently we are mapping the integration of the transmission and distribution pipelines and ensuring efficiency in order to cut the gas price," Pertamina vice president of corporate communications Wianda Pusponegoro said in Jakarta on Monday.

The goal of the cooperation between the two gas companies is to make the gas price more competitive and to extend pipelines to increase access to consumers, she said, adding that the merger is expected to save at least US$ 1.7 billion in investment.

 "It's huge enough to build pipelines in areas that have no access to gas," she added.

The government will transfer its shares in PGN to Pertamina through a mechanism called inbreng and treat them as capital injection in the form of assets.

Thus, PGN will become a subsidiary of Pertamina.

Wianda said that to realize the plan the government needed to issue a new regulation.  "The government regulation has not yet been signed. Therefore, the execution [of the merger] will be delayed. We expected that it would be implemented before Idul Fitri in July," she added. (Ayomi Amindoni)