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Govt mulls reducing gas price for glass, ceramics industries
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Energy and Mineral Resources Minister Ignasius Jonan (left) and his deputy minister, Arcandra Tahar (right), attend a hearing with the House of Representatives in Jakarta on Nov. 22. (Antara/Agung Rajasa)
T
he government is considering reducing the industrial gas price below US$6 per million British thermal unit (mmbtu) for the glass and ceramics industries, a high ranking official said.
Energy and Mineral Resources deputy minister Arcandra Tahar said that currently from 10 industries proposed, only three are able to enjoy lower prices, namely the petrochemical, fertilizer and steel industries. However Industry Minister Airlangga Hartarto had submitted a proposal again for other industries.
"Those three are strategic industries where our state owned enterprises (SOEs) operated. We are still studying which part will be reduced from these two additional sectors," he said at the Economic Coordinating Ministry's office on Friday.
He added that the gas price contribution for the glass and ceramics industries was less significant compared to those three priority industries. In the fertilizer industry, the gas price determined 70 percent of the production cost, compared to 50 to 60 percent for petrochemical and steel.
"In glass and ceramics, the gas price effect was less than 20 percent," he said.
Then, Arcandra added, the government would like to improve the efficiency of these two industries first. Because gas price reduction would cut the government's non-tax state revenue from the oil and gas sector, but in exchange, the tax revenue would be increased from the boosted industry.
He said for the three prioritized industries, the government would "sacrifice" US$1.2 billion in non-tax state revenue next year.
