Gas trading margin to be limited at 7%

Petromindo|Lucky

The Ministry of Energy and Mineral Resources plans to limit the margins of gas traders in the country at around 7 percent to help bring down gas price at end consumers such as power plant operators.

Bisnis Indonesia quoted Deputy Minister of Energy and Mineral Resources Arcandra Tahar as saying Wednesday that the revision of Ministerial Regulation No 19/2009 on gas pipeline business activities has entered the final stage after the ministry obtained inputs from gas distribution companies such as PT PGN Tbk and PT Pertamina Gas, the Indonesia Gas Trader Association (INGTA), and gas consumer associations.

Aside from the margin limit, the ministry will also ensure internal rate of return of the gas traders to reach 11 percent, according to draft of the new ministerial regulation, the paper said.

Arcandra said that the new regulation is expected to both help lower gas price at the consumers? level, and maintain the interest of gas traders in investing in gas infrastructure facilities such as pipeline.

Gas consumers such as manufacturers and state-owned electricity firm PT PLN have long complained about the expensive gas price, blaming partly on the excessive fees of the downstream services such as regasification and pipeline.

INGTA, however, said that limiting the margins at 7 percent would create difficulties for gas traders particularly that gas distribution contract period has been gradually cut down since 2008 from 10 years to five years, three years, and now only one year. The association has previously proposed for the margin limit to be set at around 10 percent. (*)