PLN told to negotiate on price with PGN
Wednesday, June 20 2012 - 09:41 AM WIB
Vice Minister of Energy and Mineral Resources Rudi Rubiandini suggested electricity firm PT Perusahaan Listrik Negara (PLN) to directly talk to gas distributor PT Perusahaan Gas Negara (PGN) on the possibility of the former paying lower price for the gas supplied by the latter.
?Both of them are state-owned companies under the (supervision of) the Office of State Minister of State Enterprises. They may directly do business negotiation in order to bring benefits to the nation as a whole,? Rudi told Petromindo.com on Wednesday.
Rudi made the statement in response to the complaints voiced by PLN?s Head of Gas and Oil Fuel Division Suryadi Mardjoeki that the price charged by PGN for its gas supplies was too burdensome.
Suryadi said after the recent price increases, PLN now pays PGN $10.2 per mmbtu for gas supplies to its Muara Tawar power plant in Bekasi, West Java, while PGN pays the gas producer, ConocoPhillips, $5.6 per mmbtu. The gas is produced by Conoco in its gas fields in southern Sumatra and delivered through PGN?s South Sumatra West Java (SSWJ) pipeline.
Suryadi said should PLN directly buy the gas from Conoco, it would only have to spend $7.2 per mmbtu, comprising $5.8 per mmbtu payable to Conoco for the gas plus $1.47 per mmbtu payable to PGN in toll fee.
Suryadi thus called on upstream authority BPMIGAS to allow PLN to directly buy the gas from the American company. The request, according to analysts, is impossible to meet given the fact PGN now gets supplies from Conoco based on a long-term contract signed in August 2004.
Rudi, a former top official at BPMIGAS, said PLN would not be able to directly bring the gas from Conoco?s fields because it does not have pipelines. The company has to use PGN?s pipeline to bring Conoco's gas for which the former has to pay the latter $1.5-$2 per mmbtu in toll fee.
?PGN however needs additional margin (to cover its expenses) for infrastructure maintenance. That?s why PGN is charging its customers $4-$5 per mmbtu in fee,? Rudi explained.
Editing by Johannes Simbolon