Lower gas price for industries expected early next year
Wednesday, October 5 2016 - 12:59 AM WIB
The government?s plan to lower gas price to below US$6 per mmbtu for selected industries is expected to be realized starting January of next year, said Minister of Industry Airlangga Hartarto.
Airlangga told reporters on Tuesday following a limited cabinet meeting on the gas price issue led by President Joko Widodo, that the government has identified 10 industries and one industrial estate to be eligible to the lower gas price.
He said that the president has instructed related ministers to finalize the lower gas price policy by late November. ?It (the lower gas price for industries) will be effective January 1, 2017,? he told reporters following the meeting, which was also attended by Minister of Finance Sri Mulyani, Coordinating Minister for Economic Affairs Darmin Nasution, Interim Minister of Energy and Mineral Resources Luhut Panjaitan, Chairman of upstream oil and gas authority SKK Migas Amien Sunaryadi, and Chairman of downstream oil and gas authority BP Migas Andy Noorsaman Sommeng.
President Joko Widodo in early May issued Presidential Regulation No 40/2016 on lower gas price for selected industries such as fertilizer, petrochemical, oleo chemical, steel, ceramics, gloves, and glassware to help improve their competitiveness, but the policy has yet to become effective pending completion of the implementing regulations. In August, the Ministry of Industry proposed four additional industries to be eligible for the lower gas price.
During the Tuesday cabinet meeting, the president noted that gas price in Indonesia, a gas producing nation, is relatively higher compared to prices in neighboring countries, thus undermining the competitiveness of local industries.
?Gas price in Indonesia reaches as high as US$9.5 per mmbtu. In fact, I heard it could even reach $11 or $12. Meanwhile price in Vietnam, for instance, is only $7, in Malaysia $4, and in Singapore $4 per mmbtu,? the president said in a statement.
He said that gas price for industries could be lowered to as low $5-6 per mmbtu. ?Simplify and streamline the supply chain to become more efficient,? he said.
The government has promised that the planned lower gas policy would not affect the revenue of the upstream producers as the cost will be shouldered from the government?s portion of revenue from the gas assets in the country.
Editing by Reiner Simanjuntak