At least 40 industries in East Java need additional gas supply

At least 40 industrial companies in East Java have suffered a severe shortage of gas supply due to a continued decline in the gas supply from state owned gas distribution company PT PGN, Neraca daily reported on Friday.

PGN acknowledged that many industrial customers in the province are in dire need of getting additional gas supply but the company said that it could do nothing to add the supply because the price offered by gas producer Lapindo Brantas was still too high. Besides BP Indonesia, Lapindo has been assigned to fulfill PGN?s gas demand.

"That is why at least 40 companies are still in the waiting list," PGN?s president director WMP Simanjuntak said in Jakarta on Thursday. According to him, Lapindo has offered to sell its gas to PGN but the price is still too high and it is even higher than those offered by Pertamina.

"Lapindo offers to sell its gas at US$2.53 per mmbtu, while those offered by Pertamina is US$2.16 per mmbtu," he was quoted as saying by the newspaper.

Simanjuntak said that negotiation with Lapindo was still underway and he hoped the latter would finally agree to lower its price to at least at the same level with those offered by Pertamina. "We fear if we agree with Lapindo?s offering price, many industrial customers will not afford to buy the gas supply from PGN. It could become a boomerang for us," he added.

He said that the gas received by PGN from existing suppliers was between 70 and 80 million cubic feet per day, or far lower than its actual demand of about 120 million cubic feet per day.

East Java has suffered a serious shortage of gas supply in recent years due to the unexpected decline in supply from main gas producer BP Indonesia. (*)