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197 companies secure cheap gas prices, contracts to be signed in May
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Two workers from state-owned gas company Perusahaan Gas Negara (PGN) check gas pipelines supplying PT Indonesia Power at a gas meter station in Tambak Lorok, Semarang, Central Java. (JP/Suherdjoko)
O
ne hundred and ninety-seven companies will buy gas at US$6 per million British thermal units (mmbtu), below the $8 per mmbtu market average, as promised by a Presidential Regulation issued in 2016.
The Energy and Mineral Resources (ESDM) Ministry issued a decree on April 13 stipulating that the companies, which fall within seven gas-reliant industries, are to prepare gas purchasing contracts with their respective government-assigned suppliers within one month.
The 197 companies, among others, include five fertilizer producers, 46 petrochemical companies, 56 steel companies, 59 ceramics producers, 16 glassware companies, six glove producers and nine oleochemical companies.
“So there is progress, but hopefully, there won’t be bureaucratic hurdles,” said Johnny Darmawan, vice chairman for oil and industry at the Indonesian Chamber of Commerce and Industry (Kadin), to The Jakarta Post.
President Joko “Jokowi” Widodo introduced the 2016 regulation to provide special prices for the seven industries as part of the government’s program to revive Indonesia’s manufacturing sector, yet four years later, gas prices remain stubbornly high.
During a Cabinet meeting on Jan. 6, Jokowi offered three solutions to bring gas prices down: increase gas imports, introduce a domestic market obligation (DMO) and slash non-tax state revenue (PNBP). He also promised to make the decision by April.
The Energy Ministry decided on April 2 to choose the third option. The ministry issued Ministerial Regulation No. 8/2020 that day. It stipulated that the government would slash non-tax state revenue from gas production and distribution activities in a bid to lower upstream and downstream costs.
