CNG price to increase to Rp 700 per liter beginning Monday

State owned oil and gas company Pertamina will raise the price of compressed natural gas (CNG) for cars by Rp 250 to Rp 700 per equivalent liter of gasoline from Rp 450 at present beginning Monday.

The new price, however, is still much lower than the price of Premium fuel which now stands at Rp 1,810 per litter.

Pertamina said that the increase is part of the company's program to cope with rising production cost. The increase is also made in line with the company's plan to improve distribution facilities of the CNG in the country.

Pertamina suffered a loss of about Rp 21 billion (US$=Rp8,400) last year from the sale of the CNG because the low price could not cover production cost. The company will continue to gradually increase the CNG price until it reach the breakeven point.

According to Pertamina, the number of CNG users has declined sharply within the past several years due to the poor distribution system. The high price of the converter kit, an additional equipment that is needed when using CNG, has also discouraged the motorists to use the gas.

CNG sales dropped to 19,513 equivalent liters in 2002 from 21,767 equivalent liters in 2001. The number of cars using the CNG also dropped to 2,500 vehicles in 2002 from 4,600 vehicles in 2001. (*)