Industry ministry to help renegotiate gas price hike

The recent move by state-owned gas distribution firm PT. PGN to increase gas price, deemed as too high by industrial customers, has prompted the Ministry of Industry to facilitate the wish of domestic industries to renegotiate the price.

?The Ministry of Industry will facilitate the price and supply negotiation between PGN and its industrial customers,? Panggah Susanto, Director General of Manufacturing Industry at the ministry of industry, told Bisnis Indonesia on Tuesday.

Panggah said that the 50 percent increase of gas price was too abrupt and many of the industrial customers were not ready for it.

PGN has increased the price of gas effective May 1 for industrial customers from US$6.8 per mmbtu to $10.12 per mmbtu.

Yustinus Gunawan of the AKLP, a flat glass producers association, said that PGN should have announced the gas price hike six months in advance to allow industries to make the necessary preparation.

Yustinus said that the price hike should have been made gradually in stages every three months, an increase of 5 percent at each stage. For instance, in the first stage, the price increase to $7.2 per mmbtu, and in the next stage increase to $7.5 per mmbtu.

Fajar Budiyono, Secretary of the Petrochemical Industry Association, or Inaplas, said that aside from hoping for a gradual increase in the price, there are Inaplas members which are simply not ready for a price hike.

Another problem is concerning gas supply. According to Fajar, gas demand from Inaplas is estimated at 800 mmscfd, but PGN so far has only fulfilled about 600 mmscfd.

Achmad Safiun, Chairman of the Natural Gas Industrial Customers Forum (FIPGB) said that the retroactive gas price policy should be annulled as it creates burden for the industrial customers.

He said that industrial customers do not really mind the gas price of about $10.2 per mmbtu as long as the supply is there. The problem is that PGN could only fulfill about 60 percent of the gas need. ?We hope that the gas supply can be fulfilled first, otherwise the burden of the industries will double.?

Achmad Wijaya, Chairman of Asaki, the association of ceramics makers, hopes that the new gas price hike could be cancelled.(*)