Govt to lower gas prices

In its efforts to lower gas sale prices to various users, the government plans to provide so called "domestic gas incentives" to customers that would amount to 10 percent of the government's income from the gas sector, according to Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

Speaking after opening a national convention of the Indonesian Engineers Association, Purnomo said that the finance minister had approved such a plan, and the latter would soon issue a decree to allocate 10 percent of the government's gas income to subside gas sale prices.

"With the domestic gas incentives, it is expected that gas prices will decrease by 40 percent to US$1.50 per MMBTU (Million British Thermal Unit)," he said.

Purnomo did not want to disclose how much money the government would be losing from providing the incentives.

In the production sharing contracts, the government through state oil and gas company Pertamina normally gets 70 percent of the income of all gas contractors, while the other 30 percent goes to the contractor.

Purnomo said that the government was willing to cut its income from gas sector in a bid to diversify energy use and revive economic activities, especially in sectors that use gas as energy sources that eventually would provide more employment for the people.

"Currently many industries like fertilizer industry use gas. And therefore, this (cut in gas sale prices) would have an impact in employment opportunities," he said.

However, Purnomo warned that the domestic gas incentives would be temporarily only. After economic activities return to normal, gas prices would be restored to its economical level, meaning that the domestic gas incentives would be removed. (*)