TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Long way to go before lower gas prices
Industry players will have to wait longer for PT Perusahaan Gas Negara (PGN), as a gas subholding, to help lower the price of gas, with obstacles in the way of PGN taking on big projects
Change Size
I
ndustry players will have to wait longer for PT Perusahaan Gas Negara (PGN), as a gas subholding, to help lower the price of gas, with obstacles in the way of PGN taking on big projects.
Industries have been burdened by high gas prices. According to 2016 data from the Association of Gas Consuming Companies (Apigas), many factories in North Sumatra were forced to close down and as many as 20,000 workers have been laid off since 2000.
Earlier this month, the government integrated PGN with state energy giant Pertamina gas subsidiary Pertagas, a step considered to be the final phase for Pertamina to fully become the holding firm in the oil and gas sector.
As a result of the integration, PGN now holds 51 percent of Pertagas shares, thus making PGN the official subholding for gas, which is hoped to lower gas prices.
However, it is expected that industry players will have to wait much longer for lower gas prices as PGN is focusing on the technicalities of the integration before it can take on projects that could help reduce prices.
The State-Owned Enterprises (SOE) Ministry’s mining, strategic industries and media affairs undersecretary, Fajar Harry Sampurno, acknowledged that the integration was not easy as many complex issues needed to be settled.
“There are many obstacles in the integration, not only from external factors but also internal such as finance, the incorporation of assets as well as the issue of profits and losses,” Fajar said recently during a meeting with House of Representatives Commission VI overseeing SOEs.
Thus, he said, the integration between PGN and Pertagas was expected to conclude within five years. One of the focuses of the integration was to put an end to gas price disparities.
PGN president director Jobi Triananda Hasjim said the firm needed further help from the government to help reduce gas prices, citing Southeast Asian countries where governments provided subsidies.
“Our moves are regulated by the government; we transmit gas from the upstream [with prices determined by the government], also for our transportation fees and the selling price to PLN,” he said
“Therefore, we can’t adjust [gas prices according] to society’s demands.”
In 2016, President Joko “Jokowi” Widodo issued Presidential Regulation No. 40/2016 on natural gas pricing in a bid to cut gas prices.
The presidential regulation stipulates that the Energy and Mineral Resources Ministry can ask gas companies to reduce their prices should they find that the firms have been selling gas for more than US$6 per million British thermal units (mmbtu), especially to certain industries.
However, the National Economic and Industry Committee (KEIN) said recently that industry players still found gas prices to be a problem.
“[...] industry players [...] even suggested that imports can be a solution as foreign gas prices are lower,” KEIN member for the energy sector, Sukhyar, said, adding that there was a possibility that the committee would advise the President to revise the regulation.
National Energy Council member Tumiran believed lowering gas prices was an urgent matter the government needed to address soon to strengthen industries, which would subsequently generate jobs.
Institute for Development of Economics and Finance (Indef) director Enny Sri Hartati warned PGN of gas traders or middlemen that could cause higher prices in the market.
