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Pertagas Acquisition to PGN, First Step of Oil and Gas Holding

State-owned gas company Perusahaan Gas Negara (IDX:PGAS), also known as PGN, is committed to support the Indonesian government’s programs in the energy sector. One of them is the government's plan to actualize the holding or merging of of state-owned enterprises (SOE).

"We believe that the establishment of SOE holding company in an effort to consolidate the management of natural gas will provide many benefits to the state and society," said Rachmat Hutama, Corporate Secretary of PGN in on Wednesday (12/06/2017).

As is it known, the Ministry of SOEs plans to establish a holding state-owned energy company. Currently, besides PGN, the other SOE energy company in arePertamina. In the plan, the Ministry of SOEs projects to become an oil and gas holding company.

According to Hutama, PGN basically believes in the spirit of establishing this oil and gas holding company to prevent dualism of downstream management of domestic natural gas. "The establishment of oil and gas holding [company] is certainly one way to avoid duplication of natural gas downstream management," Hutama said.

Currently, Pertamina has a subsidiary which is also engaged in natural gas business, namely Pertagas. "With this holding, Pertagas will be merged into PGN, then PGN becomes a subsidiary of Pertamina," he said. This is absolutely necessary to achieve the holding company objectives.

Hutama's statement refers to a scheme once conveyed by the Ministry of SOEs on various occasions. According to the scheme, state-owned Series B shares in PGN which reach 57% will be transferred to Pertamina. Meanwhile, 100% of Pertagas shares will be transferred to PGN.

PGN sees the merging of Pertagas into PGN will create a solid entity to support national energy management. "In addition to accelerating the development of integrated gas infrastructure, this unification can achieve a more equitable distribution of gas," Hutama added.

However, as a state-owned company as well as a public company subject to the Indonesia Financial Services Authority (OJK) rules and also be accountable to minority shareholders, PGN awaits the ongoing process in the government. "Currently we are still waiting for direction and continue to coordinate with the Ministry of SOEs related to PGN plans in the future," he said.

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About PGN

PGN is a state-owned company formed by the Government of the Republic of Indonesia with the aim of building the national economy by prioritizing the needs of the people towards a just and prosperous society materially and spiritually, as stated in the legal basis of the birth of PGN as stated in President Regulation Number 19 Year 1965.

In carrying out the mandate, PGN has pioneered the development of natural gas pipelines since 1974. It is not easy to pioneer the energy conversion when Indonesia is still experiencing the glory of petroleum production. Yet PGN's struggle has yielded its current results. With over 7,278 kilometers of transmission and distribution pipelines successfully being developed, PGN has successfully channeled natural gas to meet domestic demand equivalent to 23 million liters per day. PGN supplies natural gas to power plants, industries, commercial businesses including restaurants, hotels and hospitals, gas refueling stations, as well as households.

In line with the increasing demand for natural gas in the country with limited resources, PGN continues to seek strategic solutions to ensure supply for consumers and prevent the scarcity of natural gas in some areas. Currently PGN is looking for new gas supplies, especially from locations close to existing infrastructure, and seeks to obtain larger volumes to be allocated for domestic market usage.

In an effort to increase transparency and ease of funding for gas infrastructure development, the Government, in 2003, with the approval of the House of Representatives, took steps to make PGN an open company. Currently the Company is a public state-owned company listed on the (IDX). The government owns 56.97% shares in the company, while the remaining 43.03% shares are owned by the public.