Krakatau Steel suffers acute shortage of gas and power supply

The country's largest steel company PT Krakatau Steel (KS) has suffered an acute shortage of gas and power supply due to the cut in the supply for both gas and power from state owned gas utility company PGN and state owned power utility company PLN, Antara news agency reported.

Marketing director of the state owned steel producer, Kemal Masduki, said in Jakarta on Wednesday, KS had a contract to get a gas supply of 100 million standard cubic feet per day (MMSCFD) from PGN, but the gas utility company was able only to provide 74 MMSCFD.

He said that PLN had also reduced the power supply to the steel company to only 100 KVA from 150 KVA previously due to a technical problem at PLN's Muara Karang power plant.

As the consequence, KS had to operate its own power plant due to the sharp decline in the power supply from PLN, he said. "Because we don't have enough gas, we have to use diesel oil to run the power plant. This has caused a sharp increase in the company's operating costs to US$150 per ton from $40 per ton previously," he added.

The shortage of the energy supply had also resulted in the decline in the production of the company's iron sponge and iron slabs, the raw material for the production of hot rolled coils (HRC), he said.

The production of the iron sponge had declined to 100,000 tons from 150,000 tons per month, while the production of the slabs had dropped to 110,000 tons per month from 150,000 tons, he added. (*)