PLN must buy LPG at market prices: Regulator

BPH Migas, the government's agency in charge of oil and gas downstream industries, said that the state owned electricity company PLN's would have to buy liquefied petroleum gas (LPG) at market prices because there would be no government subsidy for its growing needs of LPG, Bisnis Indonesia daily reported on Friday.

"PLN should buy the LPG at market prices," Eddy Purnomo, the deputy chairman of BPH Migas was quoted as saying by Bisnis Indonesia on Friday. Eddy said that PLN would likely receive the LPG supply from the Bontang LNG plant in East Kalimantan.

He, however, said that the agency had yet to receive any formal request from PLN for the LPG supply. "We don't know yet the amount of LNG needed by PLN," he added.

According to him, PLN should buy the LPG through an auction which would be conducted by East Kal PSC, a consortium of companies providing the natural gas for the Bontang LNG Plant. The consortium comprising of Total E&P Indonesia, Unocal Indonesia, and Vico Indonesia would carry out the tender in cooperation with BPH Migas, he added.

In a bid to reduce operating costs, PLN will use LPG for its 13 power plants including the Tambak Lorok power plant in Central Java, the Sunyaragi power plant in West Java, the Siantan power plant in West Kalimantan and Sei Kledang power plant in East Kalimantan.

PLN will need at least 2.3 tons of LPG a day to support the energy conversion program. (*)