More industries may enjoy lower gas price
Tuesday, August 16 2016 - 02:04 AM WIB
The government plans to revise a recent lower gas price policy for certain industries as four additional industries have been proposed to be able to enjoy the price discount, and that the price cut may be deeper than initially targeted.
This was the conclusion of a meeting on Monday of economics ministers, upstream oil and gas authority SKK Migas, downstream gas regulator BPH Migas, state-owned oil and gas firm PT Pertamina, and state-controlled gas distribution firm PT PGN Tbk.
The government unveiled a policy early May of this year to cut down gas price for seven industries to as low as US$6 per mmbtu to help increase the competitiveness of the industries. The industries included steel, ceramics, glass, petrochemicals, fertilizer, oleochemicals, and rubber hand gloves. While the policy, is retroactively effective from the start of the year, it has yet to be implemented. The policy will not affect upstream producers as the burden for the gas price discount will be fully shouldered by the government taken from its share of revenue from gas fields.
Minister of Industry Airlangga Hartarto said that four additional industries have been proposed to be included in the list of those that would enjoy the gas price discount. They include pulp and paper, food and beverage, textile and footwear, and pharmaceutical.
?Long list is always better than short list. So we propose to expand it to ten industries,? Arilangga said.
He said that the government will set up a team to review the gas price discount policy including on deepening the gas price discount to as low as $4 per mmbtu as proposed by the fertilizer industry.
Indeed, according to Coordinating Minister for the Economy Darmin Nasution, gas price for industries in countries such as Japan, South Korea and China stands at between $4-4.55 per mmbtu, compared to current price of $8.01-8.05 per mmbtu in East Java, $9.14-9.18 per mmbtu in West Java, and $13.90-13.94 per mmbtu in Sumatra.
Editing by Reiner Simanjuntak