Govt approves Pertamina?s plan to increase LPG price

The government has approved a request by state-owned oil and gas firm PT Pertamina to increase the price of non-subsidized liquefied petroleum gas (LPG) in 12-kg container. But the timing and the size of the price increase will be decided at an upcoming consultation meeting between the government and the company, reports said on Thursday.

?In principle it has been agreed,? said Coordinating Minister for the Economy Chairul Tanjung. ?How much and when it will be raised will be determined later after a meeting between Pertamina, the SOE Ministry, the Energy and Mineral Resources Ministry, the Trade Ministry and other related shareholders,? he added.

Pertamina Vice President for Corporate Communications, Ali Mundakir said that the company plans to increase the 12-kg LPG price by between Rp 1,000-Rp 1,500 per kg.

Pertamina sells and distributes the 12-kg LPG at a loss even though it was not a part of the government?s subsidy program. Pertamina?s attempts to raise the price in the past had been blocked by the government.

The economical pricing of non-subsidized LPG should be at around Rp 15,000 ($1.29) per kilogram, but the retail price is set at Rp 7,000 per kilogram. Pertamina estimated that such a price difference would cause the company to incur losses of Rp 9 trillion every year from the sale of non-subsidized LPG. Pertamina had planned to end losses from the LPG business by 2016, The Jakarta Globe reported.

Elsewhere, Chairul dismissed speculation by the media that the resignation of Pertamina President Director Karen Agustiawan was linked to the company?s difficulties in raising the LPG price. (*)