Minister issues new regulation on gas pipelines to households

Minister of Energy and Mineral Resources Sudirman Said issued on July 6, 2015 Ministerial Regulation No.20/2015 on the Operation of Gas Distribution Networks to Households Developed by the Government to assign state owned firms to operate the gas networks.

The regulation replaces Ministerial Regulation N0. 29/2009 on the Offering Procedures of the Operation of Gas Distribution Networks to Households Developed by the Government, which is now considered incompatible with the policy of accelerating the utilization of gas by households as part of energy diversification.

Under the new regulation, the minister will, through a ministerial decree, assign state owned firms to operate gas distribution networks to households developed by the government.

The state owned firms that get the assignment are obliged to propose gas selling prices to BPH Migas for their respective areas of assignment. Meanwhile, upstream authority SKK Migas is obliged to preparer gas allocations to the state owned firms according to their respective assignment.

The gas allocation is determined with the following conditions:
1. Wellhead gas price
2. Uninterruptible
3. No take-or-pay clause, standby letters of credit, price escalation

In case the operation of the gas networks had been entrusted to regional state owned firms (BUMD) prior to the issuance of the new regulation, the state firms that will be assigned by the minister to operate the household gas pipelines should coordinate with the BUMDs and formulate plans to take over the operation from the BUMDs.

Following the issuance of the new regulation, Ministerial Regulation No. 29/2009 is no longer valid, the ministry said.

Editing by Johannes Simbolon