PGN needs government's approval to raise gas price
Tuesday, July 3 2007 - 01:53 AM WIB
State-owned gas distributor PT Perusahaan Gas Negara (PGN) needs to ask for approval from the Ministry of Energy and Mineral Resources to increase gas prices because the gas pricing for consumers including households and industries is still under the control of the government.
Director General of Oil and Gas Luluk Sumiarso said both producers and distributors, under the oil and gas law, needed to require for the government's approval in determining their gas prices.
"Companies are allowed to seek for profits, but they also have to abide by the regulation," he was quoted as saying following a meeting with senior executives of PGN and Pertamina Monday.
Luluk said that the ministry, gas producers such as Pertamina and PGN as a distributor had agreed to establish a pricing mechanism in determining the price of gas so that any increase in the gas prices would not hurt customers.
For this purpose, the government will offer three options. One is through the establishment of a fixed price, the second through the establishment of price ceiling and the third option through a pricing formula.
The gas price for customers with usage of less than 1,000 cubic meters per month can for example, be fixed. But those sold to big customers such as industries must be based on a certain formula, Luluk said.
Meanwhile, Upstream Director at the Ministry of Energy and Mineral Resources R.Priyono said that the government will also apply a different price for fertilizer producers, electricity company and industries.
PGN corporate secretary Widyatmiko Bapang said that PGN would follow the government’s decision.
According to Widyatmiko, PGN at present sets its gas price in line with the fluctuation of diesel oil and liquefied petroleum gas (LPG) prices. The gas price of US$5.5 per MMBTU is equivalent to $17 per liter of diesel oil and to $14 per MMBTU of LPG.
PGN said recently that it planned to increase the price of gas sold to industries as an adjustment following an increase in the gas prices made by its main supplier Pertamina. Pertamina has increased the price of its gas sold to PGN to $4 per MMBTU from $2.55 per MMBTU. (godang)