PGN will raise gas prices beginning November to offset high operating costs

State owned gas distribution company PT Perusahaan Gas Negara?s operating unit for eastern Java (PGN Jabati) plans to increase the retail price of its gas to industrial users to US$2.36 per million British Thermal Unit (MMBTU) beginning November from $2.16 per MMBTU at present in efforts to cope with its higher operating costs, Bisnis Indonesia reported on Tuesday.

Trijono, the general manager of PGN Jabati said that the rise would be part of the gradual increases that would be made by the company until 2005. The gas price would be further increased to $2.46 per MMBTU in February 2003 and to $2.53 in November 2004.

"The final stage of the gradual increase will be made in 2005 when the gas price is expected to reach $2.60 per MMBTU. The price will not be increased until 2008," he was quoted as saying.

The planned increases will be made in line with agreement with gas supplier PT Lapindo Brantas which operates gas field in Sidoardjo, East Java. The company, one of PGN?s gas suppliers, currently sells about 50 Million Standard Cubic Feet per day (MMSFD) to PGN. The company plans to increase the supply to 60 MMSFD beginning early next year.

At least 40 industrial companies in East Java have suffered a severe shortage of gas supply due to a continued decline in the gas supply from BP Indonesia, the main gas supplier for the province. Besides BP Indonesia, Lapindo has been assigned to fulfill PGN?s gas demand. (*)