Government set to limit margin of gas traders

The Ministry of Energy and Mineral Resources has completed draft of a new ministerial regulation that would limit the margin of gas traders at 7 percent, and an internal rate of return of 11 percent.

This was revealed by Deputy Minister of Energy and Mineral Resources Arcandra Tahar. He said that the new policy is aimed at helping to bring down gas prices for the end consumers including electricity producers.

He said that the ministerial regulation is expected to be issued this year. The draft, which has yet to be signed by Minister of Energy and Mineral Resources Ignasius Jonan, is currently in the process of ?synchronization? at the Office of the Coordinating Minister for Maritime Affairs, which oversees the Ministry of Energy and Mineral Resources.

The government has in the past year called for lower gas price for industries including power producers and manufacturers in a bid to help improve their competitiveness level. While gas price at the upstream level has been generally reduced to around US$6 per mmbtu, the price level at the end consumers could reach as high as $14 per mmbtu, triggering complaints from the industries of the excessive margins reaped by gas traders, both distribution and transmission companies.

The government initially planned to limit the margin at 5 percent of the upstream price level, but this was widely protested by gas traders and operators of gas distribution and transmission facilities, saying that such a policy would undermine efforts to build the lack of gas infrastructure facilities in the country. (*)