Govt to go ahead with LPG conversion program

The Jakarta Post , Jakarta | Tue, 08/14/2007 1:14 PM | Business

Ika Krismantari, The Jakarta Post, Bogor, West Java

Despite some protests, the government has insisted on pushing forward until 2011 with its kerosene-to-liquefied petroleum gas (LPG) program, Vice President Jusuf Kalla said Monday.

Kalla said the scheme -- which is aimed at replacing kerosene as the fuel of choice for household stoves -- would benefit the public and businesses, as well as the government.

""A household can save up to Rp 25,000 (US$2.70) a month by using LPG, compared to using kerosene,"" Kalla said.

The program is aimed at slashing the amount the government spends on subsidizing kerosene by up to Rp 22 trillion (US$2.5 billion) a year.

The government has set aside a total sum of Rp 54.1 trillion in fuel subsidies for this year alone.

Last year, Rp 60.5 trillion was spent on fuel subsidies, of which Rp 40 trillion was allocated to subsidize the price of 10 billion liters of kerosene for household use.

Aside from benefiting households and the government, Kalla said the program had also proved advantageous to businesses, since some small companies had been involved in the procurement of the new gas stoves and LPG cylinders.

""Based on the preparedness of the industry that we have seen today, we are upbeat that the program will run smoothly,"" Kalla said after visiting two factories producing LPG cylinders and gas stoves owned by PT Wika and PT Hamasa in Cileungsi, Bogor, West Java.

The government recently announced 11 firms had won tender for the procurement of the gas stoves. The companies have been tasked with reaching a total production capacity of 17 million stoves per year.

Another 11 companies have been awarded tenders to supply 13 million LPG cylinders.

The government began its kerosene-to-LPG conversion program last December, kicking off with Pertamina distributing 25,000 three-and-a-half kilogram LPG cylinders to low-income households in Kemayoran, Central Jakarta.

The implementation of the program has been slow, however, with the government only managing to replace 20 million liters of kerosene with 2,600 tons of LPG as of the end of July -- below the target of replacing 428 million liters of kerosene with 181,000 tons of LPG.

The government remains upbeat about meeting its full-year target, having already distributed a total of 6 million gas stoves and LPG cylinders free to the public. It plans to distribute up to 40 million gas stoves and cylinders by 2009.

""We will keep an eye on the distribution of the fuel, the quality of the products and also intensify public campaigning to avoid any misunderstandings in connection with the usage of LPG,"" Kalla said.

The program has been marred by protests by some dissatisfied with the limited supply of LPG in comparison to kerosene.

Unclear standardization has also led to public complaints of defective LPG stoves.

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