Govt to make pricing formula favorable to PGN

The government promised on Friday to make a pricing formula for gas supplies that will be acceptable to consumers and keep state owned gas company PT Perusahaan Gas Negara (PGN) profitable.

Director General of Oil and Gas at the Ministry of Energy and Mineral Resources Luluk Sumiarso said the pricing formula would be stipulated in a decree to be issued by the ministry.

"We shall involve gas consumers and producers in making the pricing formula," Luluk said after a meeting with PGN's top executives.

The meeting followed the recent announcement by PGN that it would raise its gas prices starting August this year. The announcement sparked protests from consumers and the government who claims to hold the right to determine gas price.

Luluk said rather than determining prices, the government would make a formula that allows PGN to adjust its prices to the changing market conditions.

He did not specify the benchmarks that PGN will use in adjusting its prices.

"(In making the pricing formula), the government will take into account the interests of gas consumers and producers," Luluk said. (Godang)