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Lower gas price brings multiplier effect to Indonesia’s economy: Expert
A lower gas price for the industry sector will significantly cut production costs and bring multiplier effect to Indonesia’s economy, particularly in eastern areas of the country, an official has said.
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Lower prices – State-owned oil and gas Pertamina president director Pertamina Dwi Sutjipto (left) talks with state fertilizer producer Pupuk Indonesia president director Aas Asikin Idat (right) during a cabinet meeting on gas prices for the industry sector at the Presidential Palace in Jakarta on Oct.4. (Antara/Puspa Perwitasari)
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lower gas price for the industry sector will significantly cut production costs and bring multiplier effects to Indonesia’s economy, particularly in eastern areas of the country, an official has said.
The Industry Ministry's staff expert Dyah Winarni Poedjiwati explained that based on a ministry's study, a 47 percent cut of gas prices would create Rp 21 trillion (US$1.62 billion) net benefits to state revenues.
Citing the study, she said a 68 percent cut would bring a net benefit of Rp 31.7 trillion, and this additional benefit would strengthen domestic industries.
As reported earlier, the government has decided to cut gas prices for the industry to approximately US$6 per million British thermal unit (mmbtu) from the current price, which stood at around $9.5 per mmbtu. The new price is expected to take effect in January 2017.
"Within the next two months, we will solve this, and it is expected that gas prices can be adjusted to between $5 and $6 per mmbtu starting on Jan. 1," said Dyah in Jakarta on Thursday.
The petrochemical industry is one of 10 industrial sectors, which will get gas allocation priority. The allocation priority is expected to boost the economy in eastern Indonesia where three petrochemical industries are being developed.
"The price adjustment will hugely impact not only state revenues, but it will also help industry development and job creation. It will push the distribution of industries to eastern parts of Indonesia where it will also improve people's welfare," Dyah said. (ebf)
