Govt urged to formulate new policy to popularize gas consumption

The government is urged to formulate a new policy on the gas sector in a bid to popularize the use of gas among consumers, the Tempo Interaktif and Suara Pembaruan daily reported on Friday.

The new policy is badly needed to stop unfair competition between gas and other oil fuels, Iin Arifin Tachyat, an expert staff to the Minister of Mines and Energy, said at a lunch talk on the National Policy on Natural Gas Development with members of the Indonesia Gas Association (IGA) in Jakarta on Thursday.

"With a set price of Rp 600 for the diesel oil per liter, for example, it is difficult for the gas to compete. Therefore we will gradually reduce the fuel subsidies and also reduce the gas prices in a bid to wipe out the unfair competition," Iin said.

He explained that in order to abolish the unfair competition the Ministry of Mines and Energy has proposed that the government is willing to reduce its revenues in the production sharing contracts on the gas sector.

The difference from the revenue reduction will be given to the consumers to enable them to buy gas at much cheaper prices, he said.

"The ball is now at the Ministry of Finance, which is in charge of making a decision as this deals with incomes to the state," Iin said.

Meanwhile, IGA chairman John Karamoy said that the issuance of the new policy on the gas sector is expected to help brighten the bleak situation in the gas investment and at the same time reduce the domestic fuel consumption.

John expressed concern over the absence of a clear-cut long-term plan on the utilization of abundant natural resources, including gas, in the country. He said that even though the government has issued a general police on energy in 1998, its implementation is unclear and tends to become a kind of lip service on the part of the related officials.

Due to the unclear regulation, John said, the domestic gas prices are not competitive as compared to other countries. The result is that the level of gas consumption on the local market is stagnant, while on the other hand the consumption fuel rises substantially, he said.

Therefore, John urged the government to issue a new incentive on the domestic gas consumption to create a kind of healthy competition. He acknowledged that at the moment it is difficult for the government to reduce its revenues from the production sharing contract system on the gas sector in which 70 percent is enjoyed by the government and the remaining 30 percent by the contractors.

"However, if the government wants to make a sacrifice, it will enjoy better incomes in the future as the policy will attracts more investors in the gas sector, thereby raising tax payments and creating wider job opportunities," he said. (*)