PGN says household market still small

Wed, 06/11/2008 10:37 AM  |  City

PT Perusahaan Gas Negara (PGN) is yet to plan the expansion of its household market despite consumers responding well to the piped-gas service by the state firm.

PGN senior executive manager of West Java's Strategic Business Unit (SBU) of Jakarta district, Daniel Hamonangan, said expanding the household market lacked commercial feasibility, given the high investment costs.

"We have not received any requests for installing piped gas services in apartments or real estate. We are ready to supply the gas but we must first consider the feasibility aspect. I don't know if we will develop the household market," he said.

"We are now a publicly listed company. We have a business focus, which means we must look for profit. We're no longer a social agency. Back then, when PGN was a public service company (Perum), we received a budget from the state, so we managed to serve others," he said.

In order to expand the household network, PGN would need to find a third party to bear the investment costs, Daniel said.

Even with a willing partner, such as a real estate company, PGN would still need to evaluate the workload given the firm had "its own priority list", he said.

He said PGN had tried to develop its commercial markets as most shopping malls and offices needed gas-based electricity generator sets. After gas supply for the generator set was agreed upon, it was expected that consumers would also need gas for their food outlets.

"So far, we have been providing gas for food outlets in shopping centers, such as Plaza Indonesia, Grand Indonesia and Ratu Plaza," he said.

Daniel said the piped gas service consisted of three components: a service pipe from the existing pipe installation to the meter, the meter itself and an installation pipe from the meter to the stove.

"For an installation to a house, a customer will need to pay Rp 1.5 million (US$161.3) for the service pipe and another Rp 1.5 million for the installation pipe," he said.

However, Daniel said, there should be an existing pipe installation near the house. Without a preexisting installation, PGN would have to consider the investment cost of building the distribution pipe.

"The engineering division has calculated the investment cost and they said the company could reach break-even point after 50 years," he said. -- JP/Tifa Asrianti

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