Demand for new LPG containers may reach 121 million units

Local producers of liquefied petroleum gas (LPG) containers have been asked to produce up to 121 million units of LPG containers of 3-kilogram capacity to support the government's ambitious program to replace heavily subsidized kerosene with LPG, Investor Daily reported on Tuesday.

The chairman of the association of local LPG containers, Tjiptadi, said in Jakarta on Monday with an assumption that the price of LPG is about Rp 50,000 each, the value of the hefty order to produce 1.2 million units of LPG containers could reach Rp 12 trillion.

"But the order will be too big for the local LPG container producers because the existing capacity is only about 10 percent of the total order," he was quoted as saying.

He said that the eight LPG container producers grouped in the association had the capability of only producing about five million units of LPG containers a year. "Most of the companies have reduced their capacity in recent years due to a decline in the demand. So, it would be difficult for them to meet such massive demands," he added.

According to him, the local LPG producers could be "forced" to increase their production capacity to 10 million units a year. "But it will take time to adjust the production system in order to meet such a production target," he added.

Minister of Industry Fahmi Idris had said that the government was exploring the possibility of providing the subsidy for the sales of the 3-kg LPG containers to ensure that the government's program to convert the heavily subsidized kerosene with LPG would be successful. (*)