Domestic price of gas to be increased gradually: VP

Vice President Boediono said Tuesday that the domestic gas price, currently low compared to international prices, would be gradually adjusted to its true economic value so that it would attract more investment.

"We need a pricing policy that will remain siding with the domestic industry, power generation, transportation and household needs," Boediono said when opening an oil and gas conference organized by the Indonesian Petroleum Association (IPA).

Boediono acknowledged that the current domestic price set by the government of $2-$3 per million British thermal units was a fraction of the average international market price of $12-$13.

It has also led to shortages, forced the import of natural gas and caused disputes over whether gas from new projects will be allocated domestically or sold to international buyers.

The government has indicated that it will limit exports in a bid to fulfill domestic demand. Indonesia currently suffers from a gas deficit of 2.5 billion standard cubic feet a day.

In addition to the pricing policy, Boediono said the government would encourage the development of gas infrastructure.

He promised the government would work out better incentives, regulations and better and faster bureaucratic processes to speed up investment and development in the gas industry. (godang/bernard)