Government to limit margin of gas traders

Petromindo|Dasir

Minister of Energy and Mineral Resources Ignasius Jonan will soon issue a new ministerial regulation that would limit margin of gas traders to 5 percent in a bid to help lower gas price for domestic industries, Kontan reported on Friday.

The paper quoted Director General of Oil and Gas at the ministry IGN Wiratmaja Puja as saying that the new regulation will among others contain gas price to end consumers, formula to determine gas transmission and distribution tariff, and incentives for gas traders engaged in distribution of gas in areas where the gas trading business is less developed.

Wiratmaja said that the 5 percent margin is considered as fair for gas traders.

But Secretary General of the Indonesian Gas Traders Association (INGTA) Eddy Asmanto said that at current condition, it would be impossible for gas traders to survive with only a 5 percent margin.

He said that it is not possible to fix margin at 5 percent as the cost to develop infrastructure facilities varies in different areas.

Eddy suggested that if the intention of the government is to bring down gas price at home, the government should instead cut down the price of gas at the upstream producers which account for 85-90 percent of the gas price at the end-consumers level, while transmission and distribution cost only accounts for 10-15 percent.

He said that with a margin of only 5 percent, there will be many gas traders who would eventually be out of business. (*)