PGN won?t cut gas supply

State gas distributor PT Perusahaan Gas Negara Tbk (PGN) has ensured it will not cut gas supply for industry in West Java by 20 percent as originally planned.

PGN President Director Hendi Priyo Santoso said on Tuesday the industry players in the province would receive 329 MMSCFD, still lower than their total need of between 460 and 480 MMSCFD.

?There will be no reduction in the quota for our subscribers,? Santoso said during a meeting with industry players at the Ministry of Industry.

He said PGN fell short of between 100 and 120 MMSCFD, but had found new suppliers. The shortage will be covered from Medco Lembatang field, Medco Kramasan field and state oil and gas company Pertamina, which will supply 82 BBTUD, 50 BBTUD and 12 BBTUD respectively as of April 1.

PGN, however, will raise the gas price by 15 percent for its West Java subscribers.

?We cannot help adjusting our price as we will cover the deficit from gas contracts that will cost us a lot,? Santoso said.

PGN buys gas from Medco at between US$5 and $5.4 per MMBTU and $4.5 per MMBTU from Pertamina.

Both PGN and the industry players agreed during the meeting on the 15 percent price hike. The new price, to be effective on April 1, has been set at an average $6.8 per MMBTU from $5.7 per MMBTU.

The two parties also agreed on a 300 percent surcharge for extra gas purchase and the surety bond mechanism through Jasindo and Jasa Raharja insurance companies at a maximum of 2 percent from the value of contract. (*)