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Jakarta Post

Government mulls over imposing gas DMO to curb electricity rates

  • News Desk

    The Jakarta Post

Jakarta   /   Thu, November 1, 2018   /   03:28 pm
Government mulls over imposing gas DMO to curb electricity rates A gas refinery operated by PT Badak Natural Gas Liquefaction in Bontang, East Kalimantan. (Antara/Puspa Perwitasari)

The Energy and Mineral Resources Ministry has proposed the issuance of a regulation to impose a price ceiling for natural gas, particularly for electricity plants, to help state-owned electricity company PLN provide affordable rates to its customers.

He explained that such a rule may be imposed through a domestic market obligation (DMO) policy. 

The ministry’s electricity director general, Andy Sommeng, said on Thursday that the policy was needed to help PLN improve its financial performance.

“We have proposed it. One of the conclusions of a hearing with the House of Representatives Commission XII overseeing energy, among others, last week was about the need for a DMO on gas prices,” said Andy as reported by kontan.co.id.

The government previously decided against increasing electricity rates and the price of subsidized fuels up to 2019.

If the proposal is agreed to, he expected gas prices for power plants to be set at US$6 per million British thermal unit (mmbtu).

PLN announced on Tuesday that it had booked Rp 18.50 trillion (US$1.22 billion) in losses as of the end of the third quarter of 2018, compared to Rp 3.04 trillion in profit in the corresponding period last year.

The company attributed the losses to an increase in operating expenses to Rp 224 trillion, a 11.82 percent increase from the operating expenses recorded in the corresponding period last year of Rp 200.31 trillion. (bbn)