Gas price reduction awaits presidential ruling

The Ministry of Energy and Mineral Resources has yet realize the planned gas price reduction for industries as it is still waiting for the issuance of the required presidential regulation, the draft of which is still being reviewed by the Ministry of Human Rights and Law.

Director General of Oil and Gas a the Ministry of Energy and Mineral Resources IGN Wiratmaja Puja said on Tuesday that although the ministerial regulation on the planned gas price reduction has yet to be issued, the policy was effective as of January 1, 2016. ?It?s effective as of January 1. How it would be arranged, we?ll discuss the calculation later,? he said, as reported by Kontan.

The planned reduction in the price of gas for industries was part of an economic policy package announced by the government of President Joko Widodo to help industries amid the current sluggish economic condition. The government has said that the gas price reduction policy would not affect the revenue of the producers as it would be shouldered by government by cutting its take from gas production.

Wiratmaja said that once the presidential regulation has been issued, the ministry will start amending gas sales and purchase contracts, first focusing on 10 contracts, affecting price of gas from fields in West Java, East Java, and Sumatra, operated by state-owned oil and gas firm PT Pertamina.

Elsewhere, Wiratmaja said that the government plans to introduce regulated margin in the downstream side of the gas business so as not to burden consumers.

Wiratmaja was also quoted by Bisnis Indonesia as saying that the ministry is drafting a new gas price formula that would create a single gas price across the country.

He said that under the current formula, gas price ranges from US$2 per mmbtu to $13 per mmtbu. (*)