Government cancels plan to divert PLN's gas supply

The government has cancelled its plan to divert the gas supply for state owned electricity company PLN to other industries because it has no money to finance the subsidy for the purchase of diesel oil to replace the gas, Koran Tempo reported on Saturday.

Director General of Oil and Gas at the Ministry of Energy and Mineral Resources Iin Arifin Takhyan confirmed the cancellation of the gas diversion on Friday, saying that it was cancelled because the government would face difficulties to finance the fuel subsidy on diesel to be used by PLN to replace the gas.

Chief Economic Minister Aburizal Bakrie said that giving more subsidies to the government would cause another problem to the state budget. "Without the additional subsidy to PLN, the fuel subsidy would total about Rp 120 trillion this year," he added.

Meanwhile the president director of the state owned gas distribution company PGN WMP Simanjuntak said that the cancellation of the gas supply from PLN would not really cause a problem, because the gas company had already secured additional gas supply from Kodeco and Lapindo Brantas.

The government earlier wanted PGN to divert its gas supplyl for PLN in East Java to other industries in the province to cope with the acute shortage of gas supply experienced by the industries. As part of the deal, the government would pay the subsidy for the procurement of additional diesel oil supply needed by PLN to replace the fuel. (*)