Govt expanding LPG program nationwide

Upbeat about the progress of its kerosene-to-liquified petroleum gas (LPG) conversion program in the country?s urban areas, the government has expanded the program nationwide, targeting up to 90 percent of the country?s households will use the fuel by the end of next year.

"We expect that by the end of January (all households) across Java will have been covered (by the kerosene-to-LPG conversion program). So possibly by the end of 2009, between 80 percent and 90 percent of households (of the country) will have been covered," Vice President Jusuf Kalla was quoted by The Jakarta Post as saying on Friday.

In order to meet the target, state owned oil and gas company PT Pertamina, which is tasked to implement the program, should provide a total of 40 million 3-kg LPG containers next year.

"If we can't meet the target, ... we would carry it over to 2010," Kalla added.

The government and Pertamina initially agreed to expand the use of LPG nationwide by 2010.

Pertamina?s President Ari H. Soemarno has voiced reservations over the plan to speed up the nationwide implementation of the program, saying the firm still lack infrastructure to implement the program.

He said aside from providing 40 million 3-kg LPG containers in one year, Pertamina should build a number of distribution facilities nationwide to support the use of LPG nationwide.

The firm will not able to provide such a number of containers unless it is allowed to import, given the limited capacity of local manufacturers. Meanwhile, the firm will only start building additional distribution facilities next year.

The kerosene-LPG conversion program which was launched in 2006, first in Jakarta and surrounding areas and then in other big towns of the country, has gained success in forcing poor households to use LPG rather the heavily subsidized kerosene. The nation?s kerosene consumption has dropped, allowing the government to save Rp 9 trillion in kerosene subsidy, Investor Daily reported.

However, the lack of Pertaminas?s distribution facilities has caused scarcity of LPG supplies in some areas recently.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the ministry had only enough funds to finance the provision of 18 million 3-kg LPG containers next year. Pertamina, thus, has to use its own internal sources to finance the provision of the rest of the LPG containers.

?Pertamina can later cut its dividend payable to the government to reimburse the costs,? Purnomo said on Friday.

Under the LPG-kerosene program, the government, through Pertamina, provides 3-kg LPG container and cooking stove for free to poor households, which used kerosene for cooking prior to the program. (*)