Minister issues regulation on lower gas price
Thursday, June 30 2016 - 12:10 PM WIB
Minister of Energy and Mineral Resources Sudirman Said has issued a regulation setting guidelines for gas users to apply for lower gas prices.
The Ministerial Regulation No. 16/2016 on Guidelines for Price Setting and Gas Users implements Presidential Regulation No. 40/2016 on lower gas prices for certain industries signed by President Joko Widodo on May 3, 2016. Under the presidential regulation allows certain industries, including fertilizer, petrochemical, oleo chemical, steel, ceramics, gloves, and glassware industries, to apply for lower gas prices.
The ministerial regulation stipulates that prices for gas should be determined in consideration of the economic viability of gas fields, the prices of gas domestically and internationally and the added value of domestic gas utilization. In case the prices of gas do not come in line with the economic viability of gas users and the prices at contractors? delivery points are more than US$6 per mmbtu, the minister can set special prices for certain gas users.
In order for the gas users to get the special prices, they have first to submit a request to the minister of energy and mineral resources through the director general of oil and gas. In filing the request, they must attach in their requests recommendation letters from the minister who oversee industrial affairs; the reasons behind the request along with audited financial reports, and document on the existing gas sales and purchasing agreement.
In response to the request, the director general of oil and gas will verify the purchasing price at contractor delivery point, the type of the industry and the remaining amount of revenue to be received by the government.
The price adjustment will be applied to the gas bought by gas users either directly from gas producers, or from licensed gas traders.
Licensed gas traders are obliged to adjust their prices in line with adjustment of their purchasing prices of gas from contractors. In case they refuse to do so, they will receive administrative sanctions.
In setting the special prices, the head of SKK Migas should calculate the government?s revenue as a result of lower gas prices in coordination with the minister of energy and mineral resources and the minister of finance. In setting the special prices, it must be assured that the gas price should not be below $6 per mmbtu and the price reduction should not be over $2 per mmbtu.
The minister of energy and mineral resources would evaluate the special gas prices each year or anytime in view of the conditions of domestic economy.
The contractors? revenue will be not affected by the new policy as the government will only its production share to allow for the lower gas prices.
Editing by Johannes Simbolon