KPPU declares PGN of committing monopoly

The Business Competition Supervisory Commission (KPPU) declared on Tuesday IDX-listed gas distribution firm PT PGN Tbk of committing monopoly practices by setting excessive gas price for industries in North Sumatra, Bisnis Indonesia reported on Wednesday.

The KPPU said in its ruling that PGN has breached Law No 5/1999 on Business Competition and ruled the company to pay penalty of Rp 9.9 billion. The commission also issued recommendation for the government to revamp the country?s gas trading sector to help bring down gas price for downstream consumers.

PGN lawyer Yahdy Salampessy was quoted by the paper as saying that that the KPPU ruling has yet to take into account the complete opinions of expert witnesses, and such does not reflect facts in the field. Meanwhile, PGN Corporate Secretary Rachmat Hutama said the company is still studying the ruling, and has yet to decide what action to be taken in response.

Meanwhile, PGN shares appreciated by 3.1 percent on the Indonesia Stock Exchange on Tuesday as analysts said that the KPPU ruling would cause significant effect on the company.

Chairman of the downstream oil and gas authority BPH Migas, Fanshurullah Asa was quoted as saying a revision of Minister of Energy and Mineral Resources Regulation No 19/2009 is in progress to overhaul the mechanism in determining gas price for consumers.

Domestic industries have long complained of the excessive gas price, undermining their competitiveness level. Experts have said that the high domestic gas price is partly attributed to the expensive distribution and transmission costs amid lack of infrastructure facilities. Some have also accused gas traders of getting excessive margins. (*)