PGN to settle price dispute

State owned gas distribution company PGN goes ahead with its price increase decision despite a strong protest not only from industrial users but also from the government, Investor Daily reported on Monday.

"We will not change our decision to raise the tariff although there are protests from many parties. But we will try to settle the dispute through business-to-business (B to B ) approach under the guidelines set by the ministry of industry," PGN's president director WMP Simanjuntak said in Jakarta last week.

Beginning last week, PGN raised the gas prices of gas sold to industries by 13.7 percent to US$3.3 per million britsh thermal unit (mmbtu). At the same time, the company also raised the toll fee (rental fee for pipelines) by 52.5 percent to Rp 450 per cubic meter so that that the overall cost that has to be paid by users is US$45 per mmbtu.

PGN plans also to increase the price and toll fee by another 17 percent and 103 percent, respectively, beginning in January, next year.

Chief Economic Minister Aburizal Barkrie has strongly protested the decision made by PGN to raise its gas prices, saying that the price increase would severely hurt industries. Speaking to reporters last week, Aburizal, PGN had no reason to increase the price because gas suppliers had yet to increase their prices to the state owned gas distribution company.

Industrial users especially ceramics producers also strongly protested the price increase, saying the increase in the price could lead to closure of their factories. (*)