Minister appoints Pertamina, PGN to operate residential gas piping

Minister of Energy and Mineral Resources Sudirman Said has issued decrees to assign two state owned firms, PT Pertamina and PT Perusahaan Gas Negara (PGN), to operate piping network built by the government to distribute gas to residential areas.

The assignment for Pertamina was set out in Ministerial Decree No. No 3293 K/12/MEM/2015, while the assignment for PGN in Ministerial Decree No 3294 K/12/MEM/2015, the ministry said in a statement on Thursday.

The assignment includes operation, maintenance of pipelines and provision and distribution of gas through the pipelines.

The government, using the state budget, has built pipelines to residential areas in dozens of cities countrywide to boost the utilization of natural gas as part of the energy diversification program.

Pertamina is given responsibility to operate such pipelines in 10 cities and regencies, namely Prabumulih (4.650 house connections), Jambi City (4.000 house connections), Sengkang City (4.172 house connections), Sidoardjo Regency (10.350 house connections), Bontang City (3.960 house connections ), Ogan Ilir Regency (3.725 house connections ), Subang Regency (4.000 house connections), Bulungan Regency (3.300 house connections), Bekasi City (3.949 house connections) and Lhokseumawe City (3.997 house connections).

PGN is given responsibility to operate pipelines in 11 areas, namely low-cost apartments in Jabodetabek (5.234 house connections), Bogor Regency (4.000 house connections), Cirebon City (4.000 house connections), Palembang City (3.311 house connections), Surabaya City (2.900 house connections), Depok City (4.000 house connections), .Tarakan City (3.366 house connections), Bekasi City (4.628 house connections), Sorong City (3.898 house connections), Blora Regency (4.000 house connections) and Semarang City (4.000 house connections).

Upstream authority is tasked to provide gas allocations for both firms with volumes subject to adjustment in view of realization of provision and distribution. The gas is delivered at wellhead price of US$4.72 per mmbtu without take-or-pay clause, standby letters of credit and price escalation.

The ministerial decrees also set out several obligations for both firms, including among others they have to guarantee standards and specifications of gas that will be distributed to households; guarantee safety of the public, workers, installation and environment; submit their plans to the director general of oil and gas and report realized volume of provision and distribution to the director general; and propose gas prices to downstream regulator BPH Migas for approval.

With regards residential gas pipelines now operated by regional state owned enterprise (BUMD), PGN is obliged to coordinate with the BUMDs on its plan to take over the operation and report to the director general.

Editing by Johannes Simbolon