PGN asks government to subsidize gas sales to PLN

State owned gas distribution company PGN has asked the government to provide subsidy for the sales of gas to state owned electricity company PLN's three combined cycle power plants. Media Indonesia reported Tuesday.

The Muara Tawar power plant in Bekasi is one of three power plants whose capacity PLN would like to boost under the so-called ?repowering? program, financed by Japanese financial agency JBIC. The two other power plants are the Tanjung Priok and Muara Karang power plants, both located in Jakarta. The three power plants have the capacity of about 720 MW.

"We want the government to subsidize the difference of the price offered by PGN and those required by PLN," PGN's president director Sutikno told reporters in Jakarta.

He said that PGN had asked a price of US$5 per million British thermal unit (MMBTU) for the gas to be supplied to the three power plants while PLN asked for $3.5 per MMBTU. The price difference of $1.5 per MMBTU can be subsidized by the government so that both state owned companies would not suffer losses from the transaction.

According to Sutikno, both PGN and PLN still have time to negotiate the price because the final contract for the gas supply had not been signed.

But PLN's director for development Ali Herman Ibrahim said that the $3.5 per MMBTU price had been agreed by PGN during a meeting which was held by Coordinating Minister of Economy Budiono recently.

PLN has earlier secured gas supplies from PT Medco Energi International (50 MMCFD), state owned oil and gas company PT Pertamina (100 MMCFD) and PGN (50 MMCFD) which will get supplies from ConocoPhillips. All the gas will be delivered through PGN?s SSWJ pipeline.(*)