TEMPO.CO, Jakarta - The government has predicted that an inappropriate strategy to lower gas prices for industries in Indonesia could cause state losses.
"Gas prices at the upstream level has been calculated based on the non-tax state revenues [PNBP] and the income taxes [PPh]," I Gusti Nyoman Wiratmaja Puja, director general of oil and gas at the Energy and Mineral Resources Ministry on Monday, October 24, 2016. "If both of them are removed, the gas price can be cheaper, but it can cause state losses."
Wiratmaja gave the comment in response to President Joko "Jokowi" Widodo's request to lower the gas price to US$6 per MMBTU, in a bid to improve the competitiveness of the country's industry sector.
Wiratmaja explained that the gas price at the upstream level is set at US$5.9 per MMBTU. With a transmission cost of US$0.9 and a distribution of US$1.5, the gas price at the user level is set at US$8.3 per MMBTU.
According to Wiratmaja, the gas price at the upstream level could be lowered up to US$5.1 per MMBTU, provided that the PNBP was to be removed.
"However, the potential state losses could reach to US$544 million per year," Wiratmaja explained, adding that if the PPNB and the PPh were to be removed, the potential state losses could reach US$1.265 billion per year.
Wiratmaja revealed that the cost component in the production sharing contract could not be lowered to reduce gas prices.
"We must honor the contracts with the oil and gas contractors (KKKS)," Wiratmaja said.
Wiratmaja suggested that the most feasible solution to reduce gas prices involved a reduction in the cost recovery.
"Two components of cost recovery that can be reduced are capital expenditures [Capex] and operating expenses [Opex]," he added.
FAJAR PEBRIANTO | RR ARIYANI