Government mulls reducing revenue to lower gas price for industries

The government is considering to cut down its non-tax revenue (PNBP) from gas lifting to help bring down the price of gas for manufacturing industries in the country without harming the upstream sector, Bisnis Indonesia reported on Thursday.

The paper quoted Coordinating Minister for Economic Affairs Darmin Nasution as saying that the government is still evaluating the option of cutting down its non-tax revenue from gas lifting to make sure that such policy will provide greater overall economic benefits. ?The non-tax revenue will not be eliminated, but reduced,? he told reporters.

Deputy Minister of Energy and Mineral Resources Arcandra Tahar earlier acknowledged that the elimination of the state non-tax revenue (PNBP) will only slightly reduce gas price for industries at plant gate by an average of US$0.7 per mmbtu. ?The PNBP is small only less than $1 per mmbtu,? he said.

?The most appropriate target for efficiency is operational expenditure at the well head. But the (proposed) reduction of PNBP is still being evaluated, whether it is attractive or not,? he said.

Director General of Chemical, Textile and Miscellaneous Industries at the Ministry of Industry, Achmad Sigt Dwiwachjono said that most manufacturing industries particularly owned by the private sector are still buying gas at an average price of $9 per mmbtu, much lower than the government?s initial commitment of bringing down the price to $6 per mmbtu for seven selected industries. Only several state-owned manufacturing firms have been able to enjoy the lower price, he added.

The government of President Joko Widodo has determined to cut down gas price for domestic manufacturing industries to help improve their competitiveness level against foreign competitors. (*)