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n a bid to overcome the problems of gas supply shortfalls, a consortium of gas-using industries on Thursday announced that it would set up a US$200 million worth of liquefied natural gas (LNG) receiving terminal in Banten.

Achmad Widjaya, the secretary-general of the Forum for Natural Gas-Using Industries (FIPGB), reported that the consortium expected the floating storage and re-gasification unit (FSRU) to begin operation in April 2012.

“We hope that the government will soon issue the permit to start the construction of the FSRU so that we can finish it on schedule in April next year,” he told reporters after a discussion session in Jakarta.

To construct an FSRU, the consortium needed to apply for 32 permits from the central government and local administrations, Achmad claimed. The consortium, he continued, would acquire the fund to build the receiving terminal from “several international banks”.

He explained that the planned FSRU would have a total capacity to store up to around 500 million standard cubic feet per day (mmscfd) of LNG — equivalent to one-third of Indonesia’s industrial total gas need.

“The LNG will be imported from several gas-producing countries such as Russia, Qatar and Nigeria. The consortium has already spoken to suppliers on how to transport the LNG to Indonesia,” Achmad said.

He added that the forum had requested that the government secure at least 796 mmscfd of gas supply for industries this year, however the government said that it could only channel as many as 538 mmscfd.

Uncertain gas supply for industries has long been a major factor hindering the development of the industrial sector in Indonesia and one reason why many potential investors have canceled their investment plans.

Achmad said earlier that heavy gas users such as ceramic, glass and cement industries were forced to reduce their working hours due to the gas supply shortage.

“If the government failed to ensure sufficient gas allocation for industries, many foreign investors might relocate their factories to other countries,” he said last month.

The Energy and Mineral Resources Ministry’s director general of oil and gas, Evita Herawati Legowo, said previously that currently the main constraint that might impede gas supply for industries was lack of infrastructure due to the limitations of state gas distributor PT PGN’s pipeline network.

ReforMiner Institute executive director Pri Agung Rakhmanto said the problems of gas supply shortage in Indonesia did not only lie with infrastructure constraints, but also the government’s weakness in determining the amount of gas that should be allocated to fulfill the domestic demand.

“The government’s regulation on the domestic market obligation [DMO] is unclear and half-heated,” he told the discussion.

Indonesia’s law on oil and gas requires oil and gas producers to allocate 25 percent of their production to the domestic market. Currently, there is no clear regulation on the price of gas sold to domestic buyers. The prices are determined through business-to-business negotiations between sellers and buyers.

“The government should be brave about setting the price. The price must be affordable for domestic buyers, but also economical for gas producers,” Pri said.