REPUBLIKA.CO.ID, JAKARTA -- The government will ask state oil and gas company PT Pertamina to build and operate a 270-kilometer gas pipe between Semarang-Cirebon-Balongan with fund from the state budget.

It will be a multi-year project to be operational in 2017, acting director general of oil and gas (Migas) I Gusti Nyoman Wiratmadja before a meeting with the Commission VII of the Parliament here on Wednesday.

Gusti Nyoman said earlier the project was awarded to PT Rekayasa Industri (Rekind), but the state-owned construction company failed to carry out the project.

"Rekind has returned its special right to build the project to the government," he said.

He said the government will use the capital participation scheme to build the gas pipe.

"The government will provide the finance and Pertamina will build and operate the pipe," he said.

Pertamina has the right to receive capital participation from the government as it is fully owned by the government, he said.

Similar scheme will also be used to finance development of gas fuel filling stations, he said.

The government will issue a regulation with a decision of the energy and mineral resources minister to assign Pertamina to carry out the job.

Gusti Nyoman said in 2015, the government will allocate Rp112.5 billion for the project to finance the survey , land preparation front end engineering design (FEED).

"Further financing will be with funds from state budgets of the following years," he said.

In 2016, Rp2.25 trillion will be allocated in the state budget for land clearing and construction and in 2017, around Rp1.5 trillion more fund would be set aside for the project including for construction and operation .

The total cost of the project, therefore, will reach Rp3.86 trillion Gusti said.

"If everything is as scheduled , the gas pipe would be in operation in 2017," he said.

The gas will be supplied from a floating storage and regasification (FSRU) facility off Jakarta owned by PT Nusantara Regas and one to be built in the sea off Semarang.

"The gas pipe facilitate development of industries in Central Java, West Java and

Banten," he said.

A similar scheme will be used for the construction of a 130-kilometer gas pipe between Balikpapan-Samarinda in East Kalimantan.

In 2015, the government will set aside Rp29.25 billion in the state budget for the project survey , land preparation and FEED.

In 2016, the government will allocate Rp585 billion form the state budget for land clearing and construction and in 2017, more fund -- Rp390 billion -- will be set side for construction until completion .

The Balikpapan-Samarinda gas pipe project will cost around Rp1.004 trillion.

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