Industry Ministry Eyeing to Cut Gas Prices
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14 September 2020 21:13 WIB
TEMPO.CO, Jakarta - The Ministry of Industry (Kemenperin) has again planned to lower industrial gas prices from its current price of USD 6 per MMBTU (Million Metric British Thermal Unit).
"We call for the gas price to be lowered [again] so that it can improve competitiveness. We hope that it can be lowered to USD 4 per MMBTU [especially for the metal industry] because the metal industry is the sector that absorbs the most energy," said the Industry Ministry's Metal, Machinery, Transportation Equipment and, Electronic Industry Director-General Taufiek Bawazier on Monday, September 14, 2020.
According to Taufiek, compared to other countries, the playing field of the local steel industry in the global market must be equal.
The tariff reduction was recently realized by reducing the government's share of earnings from gas sales by USD2.2 per MMBTU to USD6 MMBTU. However, the national price was still considered higher than that of neighboring countries.
In early 2020, the ministry prepared three schemes to implement the Government Regulation No. 40/2016 on determining natural gas prices. The options are reducing the government's share, creating a domestic market obligation (DMO), and opening imports. The chosen scheme for the first quarter of 2020 was the reduction of the government's share.
"We are now proposing lower prices of industrial gas [to USD 4 per MMBTU] again," Taufiek remarked.
In addition, the Industry Ministry simulated that the competitiveness of the steel industry will remain negative although the gas prices had been cut to USD 5 per MMBTU. The reduction of gas price to USD 6 per MMBTU had reportedly improved the competitiveness of local steel, higher than the imported steel.
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