Government to regulate domestic LPG trade

The government is finalizing a new ruling which will regulate the liquefied petroleum gas (LPG) trade in the domestic market and change the formula in determining prices of LPG sold to households and businesses.

Saryono Hadiwidjoyo, the director for downstream division at the Ministry of Energy and Mineral Resources, said in Jakarta on Tuesday that he hoped the new regulation could be completed in February.

"The price formula (that will be changed) is for the subsidized LPG sold in 3-kg container," he said.

He did not elaborate the planned change in the domestic LPG trade. About the planned issuance of the new LPG price formula, he said that the mechanism in determining the current prices of LPG sold to households and businesses was needed to keep up with the fall in oil prices.

Pertamina which has an exclusive right in the distribution of LPG, sells three different sizes of LPG cylinders in the domestic market, consisting of the subsidized 3-kg, non-subsidized 12-kg and 50-kg cylinders.

At present, the prices of the LPG are based on the price reference issued by Saudi Arabian LPG producer Aramco. Pertamina claims that it still suffered a loss from the LPG sales because their high distribution costs which accounted for about 45 percent of the prices.

Saryono said that the government wanted to change the price formula because the high distribution costs as claimed by Pertamina were considered still too high. (*)