Pertamina to lower LPG price for businesses

State oil and gas firm PT Pertamina plans to lower the price of liquefied petroleum gas (LPG) in 50-kg container, which is widely used by businesses such as hotels, restaurants, hospitals, and luxury houses starting next week, Kompas reported Saturday.

Achmad Faisal, Pertamina's Marketing Director, said in Jakarta Friday that his office was still calculating the ideal price for the LPG in the 50-kg container but a decision was expected to come next week.

"The price cut is expected to stop the trend in which business customers switch from 50-kg container to 12-kg container," he said.

In January 2008, Pertamina raised the price of LPG in 50-kg container by 35.5 percent to Rp 7,932 per kg. At the same time, the price of LPG sold in bulk (equal to 5,000 kg) for industrial consumers was also increased by 25.2 percent to Rp 7,329 per kg from Rp 5,852 per kg.

However, the price of the LPG in the 12-kg container, which is widely used by households, was maintained at Rp 4,250 per kg.

The growing price disparity has caused the industrial and business users to switch to the 12-kg container. This has resulted in the shortage of the supply in the LPG in the 12-container. The price of the LPG in the 12-kg container has since increased sharply in the market.

Pertamina said that since the price increase, the sale of LPG to industrial and business buyers has dropped to 4,500 tons a month from 15,000 tons a month, while the sale of LPG for the 12-container has risen by about 400 tons a month. (*)