Minister of Industry Suggests Proposals to Reduce Gas Price



Mahinda Arkyasa

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  • TEMPO.CO, Jakarta - The Minister of Industry Agus Gumiwang Kartasasmita, has called for the easing of private sector gas import regulations, with the condition that the imported gas will be utilized for the development of certain industrial sectors that are yet to be connected to the national gas network.

    "So that our industries can compete with other industries in the sector," said Agus in a press conference on Monday, January 6, 2020.

    The suggestion was delivered as a result of the current average price of industrial gas recorded at USD 8 to 9 per MMBTU (Million Metric British Thermal Unit). The government has principally intended the price of industrial gas to be USD 6 per MMBTU for a number of industries. However, this target was not optimal in practice.

    Agus went on to state that currently, there are foreign parties who can sell gas to Indonesia for between USD 3 to 4 per MMBTU. As a result, Agus has estimated that the industry will secure a price of USD 4.5 per MMBTU.

    Agus is not concerned with this importation resulting in the increase of oil and gas trade deficit. Agus said that the Ministry of Industry have completed their own simulation as well as calculation with the Institute of Economic and Civil Investigation (LPEM) of the University of Indonesia.

    In the event that the price of natural gas decreased to USD 4, the state revenue will decrease by IDR 53.86 billion from the Non- Tax State Revenue (PNBP). On the other hand, an increase in revenue will be apparent from the subsequent increase of the Value-added Tax (PPN) and Corporate Income Tax (PPh Badan) by IDR 85.84 billion. 

    This is one of the proposals put forth by the Ministry of Industry geared to reduce the price of industrial gas. The two other proposals would refer, respectively, to a USD 2.2 reduction of the PNBP for PT Perusahaan Gas Negara (PGN), as well as, the requiring of Gas Cooperation Contract Holders (K3) to follow Domestic Market Obligations (DMI) in order to maintain the allocation of industrial gas.