Protests mounts against PGN? gas price increase

By Bernard Loebs

Industries and state owned electricity firm PT Perusahaan Listrik Negara have voiced protest against gas price increases imposed by state owned gas distributor PT Perusahaan Gas Negara, saying the increase was too much.

In a notice sent to all its customers in the so-called SBU 1 zone, which covers western part of Java and South Sumatra, PGN said effective May 1, its selling price is US$10.2 per mmbtu, up by around 50 percent. The firm sent the notice after signing agreements with its gas suppliers, ConocoPhilips and Pertamina, on May 8 to raise its purchasing prices to between $5.5 and $6.5 per mmbtu from $1.85 and $2.2 per mmbtu, a more than threefold jump.

Suryadi Mardjoeki, PLN?s Division Head of Oil Fuels and Gas, said PLN deserves different treatment since it serves the public interest. The firm is thus entitled to a special price.

?We want the price for PLN to be decided by the government, rather than (by PGN) through a business-to-business mechanism,? Suryadi said.

At present, PLN receive gas supplies amounting 147 mmscfd from PGN for its Muara Tawar power plant in Bekasi, West Java. The old price is 6.4 per mmbtu.

Suryadi said PLN would prefer directly buying from gas producers, rather than through PGN. Under such scheme, PLN would only pay the gas at the price set by the gas producers plus a toll fee to PGN. The total cost is thus estimated at $7.75 per mmbtu.

Meanwhile, Indonesian Employers Association?s (Apindo) Chairman Sofjan Wanandi criticized PGN for increasing prices without negotiating with businesses, something he said would hit their bottom line.

?We understand that PGN has to increase prices to pay its investments, but we hoped there would be negotiation to find a win-win solution,? he was quoted by the local media as saying.

Sofjan said he expected that the company to raise prices gradually so industries could adjust without financial pressure.

Editing by Johannes Simbolon