STOCKS THINNING AS HOUSEWIVES SHIFT TO 3-KG GAS

By Andi Abdusslam

     Jakarta, Oct 13 (ANTARA) - Many housewives who had been regular users of liquefied petroleum gas (LPG) in 12-kg cylinders have switched to the fuel in subsidized 3-kg cylinders following state-owned oil and gas company Pertamina's  decision to raise the price of  12-kg cylinder LPG over the weekend.
    "We decided to buy a package of stove and a 3-kg gas cylinder because the price of LPG in 3-kg cylinders is not raised," Maruroh, a housewife in Jember, East Java, said.
     On Saturday, October 10, Pertamina raised the price of 12-kg cylinder LPG by Rp100 per kg or Rp1,200 per cylinder on the ground  that it was suffering losses with  the old price.
     With Peramina's decision,  the price of 12-kg cylinder LPG at  distributor's level would increase from Rp5,750 to Rp5,850 per kg or from Rp69,000 to Rp70,200 per cylinder.  While at the retailer's level, the price would increase to between Rp75,000 and Rp78,000 per cylinder because retailers still had to bear transportation and margin costs.
     "I have switched to  3-kg cylinder gas because I can then save between Rp21,000 and Rp24,000 on  each 12-kg cylinder gas," Mimin, a housewife at Pamulang Villa, Tangerang, Banten,  said.
     As many housewives --including those economically well-off -- switch to the subsidized gas, stocks of  the 3-kg canister gas (designed for low-income people have begun to run low  in the markets of certain regions.
     In Madiun, East Java, for example, a number of distributors have begun to feel the scarcity of 3-kg cylinder gas stocks.
     "Since the increase in the prices of 6-kg, 12-kg and 50-kg cylinder gas, demand for 3-kg canister gas whose price was not raised has drastically increased. Many consumers of the 12-kg have switched to the 3-kg gas," Saptono, an LPG distributor in Madiun, said.
     In the meantime, he said, sales of 12-kg gas had dropped 50 percent. He used to sell between 50 to 75 cylinders per day. After the price rise, the sales were only between 25 to 30 cylinders per day.
     The Yogyakarta Consumers Institute (LKY) therefore called on the government to review the price increase policy because it put a burden on the people. "Considering  the consumers' purchasing power, it appears that the increase  in the 12-kg cylinder gas price has put an economic burden on the people," LKY chairman Widjantoro said.
     He said that restrictions on who might by allowed to buy 3-kg gas should be imposed because otherwise the increase in the 12-kg gas price would cause turmoil in consumers' demand for the 3-kg gas.
     "The problem that we have to solve is how to enable consumers in the lower income bracket  to use most of the subsidized 3-kg canister gas," he said. In terms of access to cheap energy, he said, economically weak consumers often find it difficult to obtain  cheap  energy.
     Therefore, as energy is a basic necessary, the government should maintain its subsidy for low-income people. It is the government's responsibility to provide cheap basic necessaries for the people.
    "The government should not use market law in deciding prices for basic necessaries. If it does so, prices would continue to increase," Widjantoro said adding that if the prices of non-basic necessaries were left to the market mechanism, probably it would not cause problems.
     Therefore, he said, the government should review the price increase of 12-kg cylinder LPG because it would have impact on the people. After all, many upper class consumers have also switched to the 3-kg gas, causing its stocks to run short.
     However, Vice President Jusuf Kalla expressed his confidence that the switch in the use of 3-kg gas by consumers who so far had used 12-kg gas would not last longer because it would not be efficient for them to use the smaller canister size.
     "I think that would be temporary because those who usually use 12-kg gas are large families. If they use 3-kg gas they will purchase one once in three days and that would not be efficient," the vice president said.
     In the meantime, Pertamina has appealed to the public, particularly those of the middle and upper classes not to use 3-kg cylinder LPG because LPG in that canister size was subsidized and was designed for people of the lower income bracket.
     It said that Pertamina had suffered losses due to substandard prices of LPG it sold to the  public. After all, Pertamina has the right to decide prices of gas, particularly that in larger canisters or 6 kg and above.
     In spite of that however, the  government will continue to supervise the price of LPG which was raised by Pertamina.  Director General of Oil and Gas of the Energy and Mineral Resources Ministry (ESDM), Evita Legowo, said that the government would not abdicate its  responsibility with regard to the price increase, even though Pertamina had the full authority to raise it.
     "We will continue to supervise it," she said adding that the government had issued three conditions before Pertamina could increase the price of 12-kg cylinder LPG.
     She said that the three conditions were the increase should be based on the reference price, the purchasing power of consumers and the continual availability and distribution of stocks.
     The director general said that an LPG price which was adjusted to the international market would have the consequences where price would fluctuate.  "If the international price declines, the price at home should also be lowered," she said.
     The government has issued a ministerial decree on LPG trade regulation. Based on the trade regulation, the prices of 12-kg, 50-kg cylinder LPG or of that without cylinders should be adjusted to the market mechanism or be decided by the corporate body.
     However, the corporate body should also gain the government's approval before it could raise prices. The price of subsidized 3-kg cylinder LPG meanwhile is decided by the government.***2***

(A014/A/HAJM/15:45/f001)  (T.A014/A/A014/A/F001) 13-10-2009 15:59:46