Government mulls gas import to push down price

Despite sufficient domestic supply, the government is considering the possibility of importing gas from cheaper sources in a bid to quickly lower gas price for domestic manufacturing industries.

Cabinet Secretary Pramono Anung said in a statement issued Tuesday, following a limited cabinet meeting led by President Joko Widodo, under a planned new policy, the role of middlemen will be eliminated to help cut down gas price for domestic industries.

He said that gas prices in the Middle East currently hover at US$3-$3.5 per mbbtu, much lower compared to gas prices at home which are mostly more than $6 per mmbtu. ?Their average gas prices are between $3-$3.5 per mmbtu, so with transportation (cost) and other things, hopefully the gas price (at home) can reach $4.5 per mmbtu,? Pramono said.

He added that the government will make sure that the gas import will only be allowed for industries that really need the commodity to avoid excessive import.

President Joko Widodo issued in May of last year Presidential Regulation No 40/2016 on lower gas price for seven selected industries. But so far, only three industries including petrochemical, fertilizer, and steel have enjoyed lower gas price of less than $6 per mmbtu.

Editing by Reiner Simanjuntak