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PLN and other power companies added to list of recipients of cheap gas

State-owned electricity company PLN and independent power producers (IPPs) will buy gas at US$6 per million British thermal unit (mmbtu), below the market average of $8 per mmbtu.

Norman Harsono (The Jakarta Post)
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Jakarta
Tue, April 28, 2020

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 PLN and other power companies added to list of recipients of cheap gas A technician of state-owned gas company PGN inspects gas pipelines at the company’s metering and regulating station in Medan, North Sumatra. (Antara/Irsan Mulyadi)

T

he government has added the power generation industry to a list of industries eligible for cheap gas, a non-fiscal incentive intended to improve the competitiveness of the country’s key industries.

The Energy and Mineral Resources Ministry issued on April 6 Regulation No. 10/2020, which stipulates that state-owned electricity company PLN and independent power producers (IPPs) can buy gas at US$6 per million British thermal unit (mmbtu), below the market average of $8 per mmbtu.

The incentive, which has also been given to nearly 200 companies engaged in key industries, is subject to ministerial approval on a case-by-case basis.

Energy ministry spokesman Agung Pribadi said on Monday that the government would slash non-tax state revenue from upstream and midstream gas operations to reduce gas prices.

“The price adjustment will not affect contractors’ income,” he said in reference to upstream oil and gas companies.

He ensured that Indonesia’s largest midstream gas player, Perusahaan Negara Gas (PGN), a subsidiary of state-owned energy giant Pertamina, would also receive “proportional incentives” in reducing gas distribution costs.

Indonesia plans to launch 8,823 megawatts (MW) worth of new power plants this year. Of the total, gas-fired power plants will account for 42.9 percent and coal-fired power plants will account for 49.6 percent.

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