Jakarta, Jan 8 (Antara) - It is feared that consumers of unsubsidized
12-kilogram cylinders of liquefied petroleum gas (LPG) will switch to
using the subsidized 3-kilogram LPG canisters after state-owned oil and
gas firm Pertamina raised the price of the former.
Pertamina raised the price of 12-kilogram canisters of gas to Rp18,000
per cylinder, or some Rp1,500 per kilogram, on January 2.
The price of gas was raised in stages in an effort to reach its
economic viability after Pertamina sold it below the market price and
suffered losses for long.
With the hike, the price of 12-kilogram cylinders of gas in Jakarta and its vicinity rose from Rp120,000 to Rp140,000.
Therefore, it is feared that the increase in the price of the
12-kilogram gas canisters will boost the migration of customers using
them to the subsidized 3-kilogram ones, which was designed by the
government for financially weak consumers.
Pertamina has laid a gradual price increase roadmap for its LPG in an
effort to reach an economically viable gas price at about Rp11,944 per
kilogram by mid-2016.
According to the roadmap, Pertamina planned to gradually increase the
price of 12-kilogram LPG cylinders by Rp1,000 per kilogram on July 1,
2014, and by Rp1,500 per kilogram during the first and second semesters
of 2015 and 2016.
However,
the company put its plan to raise the LPG price on July 1, 2014, on
hold because it coincided with the fasting month of Ramadhan and Idul
Fitri festivities during which the demand for LPG rises.
It
then raised the price of the 12-kilogram cylinder by Rp1,500 per
kilogram, or by Rp18 thousand per 12-kilogram cylinder, effective
September 10, 2014.
In line with the plan, Pertamina again raised the price on January 2.
Regarding
consumers of the subsidized 3-kilogram gas, based on Regulation No.
26/2009 of the Energy and Mineral Resources Minister, gas in 3-kilogram
cylinders should be sold only to households with a maximum monthly
expenditure of Rp1.5 million and micro businesses with a monthly
turnover of Rp50 million.
Even then, consumers of LPG in 12-kilogram cylinders switched to using
LPG in 3-kilogram cylinders when there was a price increase in the
former.
Director of PT Dwi Karya Mandala Maya Novita opined recently that the
sale of gas in 3-kilogram cylinders is off target because the subsidized
gas is also consumed by people of upper economic classes and
businesses.
Whether there will be migration of 12-kilogram gas customers to
3-kilogram gas this time still needs to be seen as Pertamina raised the
price only last week.
According to Pertamina for the Marketing Region of Central Java and
Yogyakarta, the shifting of customers to 3-kilogram gas canisters is
difficult to prevent.
"In reality, it is reasonable for customers to switch to 3-kilogram
gas, and it is very difficult to prevent the same following the increase
in the price of gas in 12-kilogram cylinders by Rp1,500 per kilogram,"
External Relations Officer of Pertamina of the Central Java and
Yogyakarta Office Robert M. V. Dumatubun said on Wednesday.
However, Pertamina cannot predict how many customers have already moved
to using the 3-kilogram gas cylinders yet because the price was raised
only on January 2, he noted.
Some customers in Sukabumi, West Java, however, have migrated to the
3-kilogram gas as they can feel the burden of using gas in the
12-kilogram cylinders.
"About 10 to 15 percent of my customers have switched to using
3-kilogram gas because its price is relatively lower," Iwan, an LPG
retailer in Jalan Cibadak-Pelabuhanratu, Sukabumi, affirmed on
Wednesday.
He added that the price of the 12-kilogram gas canisters was Rp150
thousand per cylinder, while that of the 3-kilogram gas was Rp17
thousand per canister. The large price margin between the two types
caused consumers of 12-kilogram gas to shift to the cheaper 3-kilogram
one.
Therefore, the Indonesian Consumers Institute Foundation (YLKI) urged
Pertamina to improve its regulations on gas sales so that the sale of
the cheaper gas is not off target and is not enjoyed by financially
capable consumers," he remarked.
"The public will consider using the cheaper one. Therefore, trade
regulations on gas must be improved so that the sale of the cheaper gas
is not off target and is not enjoyed by financially capable consumers," a
YLKI executive, Tulus Abadi, stated on Monday (January 5).
He added that to prevent this consumer migration, improving gas trade regulations was an urgent requirement.
It is almost certain that people will switch to using the 3-kilogram
cylinders of gas because its price is lower than that of the 12-kilogram
ones.
"Pertamina should improve trade regulations on gas to prevent consumers
from switching to using 3-kilogram canisters from 12-kilogram
cylinders," Abadi noted.
The YLKI executive also suggested
that the government guarantee the kind of supply chain used and the
price of 12-kilogram gas canisters. "Pertamina should guarantee that
distributors of 12-kilogram gas cylinders will use short distribution
chains. A short distribution chain would ensure that its administration
costs will not be high, whereas long distribution chains would lead to a
hike in its price," he explained.
Furthermore, legislator Satya Widya Yudh, the deputy chairman of
Commission VII on energy affairs of the House of Representatives (DPR),
questioned the move of Pertamina to unilaterally raise the price of gas
without prior consultation with the government.
"The price of LPG shall be decided by the government or by the minister
of energy and mineral resources, not by Pertamina," Yudha emphasized
during a discussion on the outlook of the gas sector in 2015 on
Wednesday.
He added that there should be two separate price policies for the 12-kilogram gas and the 3-kilogram one.
"There should be two price policies for the public commodity," Yudha remarked.
According
to the legislator, the law banned the government from letting the price
of energy float based on market mechanisms. The government should
control and regulate the price of energy, including that of LPG, he
stressed.
The
legislator also opined that the government did not want to think hard
but just tolerated Pertamina's move of raising the cost of
non-subsidized gas in 12-kilogram cylinders.
However, he admitted that the state-owned oil firm's complaint about
its losses over the LPG business deserved the government's attention.
But raising prices should not always be the measure resorted to because
it will boost the demand for 3-kilogram gas canisters.
Yudha further suggested that some subsidy provided for the 3-kilogram
gas be reduced and diverted to the 12-kilogram gas. The price of the
former will, of course, increase after some of its subsidy is diverted
to the latter.
Till November 2014, Pertamina had suffered losses amounting to US$340
million for 12-kilogram gas, and till the end of the year, the amount
rose to US$500 million, according to Pertamina spokesman Ahmad Bambang,
as quoted by the Jakarta Globe on Friday last week.
***3***
(T.A014/INE)
EDITED BY INE
(T.A014/A/BESSR/A. Abdussalam) 08-01-2015 21:10:2 |
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