Pertamina will soon open tender for procurement of LPG containers

State-owned oil and gas company PT Pertamina will open a tender next week to procure 800,000 LPG containers, each with a capacity of 3 kilogram, to support the government's program to replace the use of heavily subsidized kerosene with cheaper liquefied petroleum gas (LPG).

Pertamina's marketing director Achmad Faisal said in Jakarta on Monday that at least seven LPG containers from East Java had applied to join the tender.

"We will see, if the price offered by the companies is 15 percent higher than imports, we might decide to import the containers rather than buying from," he said.

According to him, the 3-kg LPG containers should ideally be available in the market for between Rp 115,000 and Rp 120,000 each.

Faisal said that Pertamina had allocated up to Rp 569 billion in its budget to finance the LPG container procurement which was expected to be completed by the end of November. He said that if the government decided to provide the LPG containers for free to the people, Pertamina would ask for full refund.

The government, through Pertamina, is currently conducting a pilot project in a number of residential areas in Jakarta to increase the use of LPG in households as part of the government's program to reduce the subsidy of kerosene.

The kerosene-to-LPG conversion program will be launched nationwide next year. With this program, the government hopes to be able to reduce the use of kerosene by 1.74 million kiloliters in 2007. At least 1 million tons of LPG will be supplied to meet this target. With such a scenario, the government could reduce the subsidy by at least Rp 1.3 trillion next year. (godang/ryanto)