Minister to regulate returns of gas industry players

Minister of Energy and Mineral Resources Ignasius Jonan said that the ministry is currently drafting a new ministerial regulation to revamp the midstream and downstream side of the domestic gas supply chain in a bid to help create ?reasonable? gas price for domestic industries including manufacturing and power plants.

Ignasius said during a hearing with the House of Representatives Commission VII on energy and mining on Thursday that in many cases gas price for industries are not reasonable and thus must be lowered.

He cited as an example the excessive gas price for the Pesanggaran gas-fired power plant, causing the electricity price to be high. ?We have agreed to take decision to renegotiate (the price),? he said as quoted in a ministry statement.

Director General of Oil and Gas at the ministry IGN Wiratmaja Puja said in the statement that the upcoming new regulation include among others limiting internal rate of return (IRR) of the midstream and downstream industries in the gas supply chain at 11 percent, margins of traders at 7 percent, and pipeline depreciation of 15 years. ?Currently, it is not regulated, causing some (players) of getting excessive profit, while others get little,? he said.

Editing by Reiner Simanjuntak