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Jakarta Post

PGN channels cheap gas to Unilever’s North Sumatra plant

  • Norman Harsono

    The Jakarta Post

Jakarta   /   Sat, July 4, 2020   /   09:50 am
PGN channels cheap gas to Unilever’s North Sumatra plant The PT Unilever Oleochemical Indonesia (UOI) factory in the Sei Mangkei Special Economic Zone (SEZ), North Sumatra. UOI is owned by PT Unilever Indonesia Tbk. (Unilever Oleochemical Indonesia/Unilever Oleochemical Indonesia)

Top national gas distributor PGN is channeling price-reduced natural gas to a major oleochemical plant in North Sumatra owned by a subsidiary of consumer giant PT Unilever Indonesia, giving a boost to the plant’s production.

PT Unilever Oleochemical Indonesia (UOI), which owns the plant in Sei Mangkei Special Economic Zone (SEZ), has been paying US$6 per million British thermal unit (mmbtu) of gas since June 1. It was paying $8 per mmbtu before the government offered the price incentive.

“Eighty-five percent of our products are exported so we can become more competitive,” Sancoyo Antarikso, corporate secretary of PT Unilever Indonesia, told The Jakarta Post on Friday.

The Rp 2 trillion (US$137.6 million) plant, which began operations in 2015, processes crude palm oil into 200,000 tons of oleochemicals each year. The chemicals are processed into soap, shampoo, detergent and plastic, among other everyday items.

Unilever is among a hundred companies in Indonesia slated to receive the price-reduced natural gas over the next four years, as stipulated under Energy and Mineral Resources (ESDM) Ministry Decree (Kepmen) No. 89/2020.

The decree is part of a government plan to grow Indonesia’s manufacturing sector, which contributes 20 percent of the country’s Gross Domestic Product (GDP) but has been battered by the impacts of the ongoing health crisis.

PGN said on Friday that Unilever was its biggest customer in Sei Mangkei. The oleochemical plant uses 2,400 mmbtu of gas each day, which accounts for two-thirds of the total gas channeled into the economic zone.

“The growth of northern Sumatra can be accelerated with the provision of competitively-priced energy, including gas,” PGN commercial director Faris Aziz said in a statement.

Bambang Wijanarko of the SEZ National Council said the gas incentive could help Unilever realize its long-term plan to expand its oleochemical operations, “which has been held up by high gas prices.” 

He added that other companies in Sei Mangkei, where gas prices rose to $10 per mmbtu for industrial sites, wanted to receive a similar gas incentive as UOI.

Unilever has stated that the company still had to adjust to the current circumstances of the COVID-19 pandemic despite its expansion plan.

PT Unilever Indonesia reported a net profit of 1.86 trillion in the first quarter of this year, an increase of 6.5 percent year-on-year (yoy). 

PGN’s gas suppliers for northern Sumatra are Triangle Pase Inc. and three Pertamina subsidiaries. The companies supply around 31 million standard cubic feet per day (mmscfd).