Sabtu, 04 Januari 2014

PERTAMINA URGED TO REVIEW GAS PRICE HIKE

 By Andi Abdussalam  
          Jakarta, Jan 4 (Antara) - The government and state-owned oil and gas company Pertamina has been called on to review a decision made by Pertamina to raise the price of non-subsidized gas in 12-kg cylinders by 68 percent.
         Secretary of the Great Indonesian Movement Party (Gerindra) Faction in the House of Representatives (DPR), Edhy Prabowo, said the increase of liquefied petroleum gas (LGP) in 12-kg cylinders placed a heavy burden on the public.
         "We have received a lot of complaints from the people. They have to bear heavy burdens as a result of the increase of non-subsidized gas," Prabowo stated on Saturday.
         Therefore, he called on the government, in this case Chief Economic Minister Hattar Rajasa, State Enterprise Minister Dahlan Iskan and Pertamina President Director Karen Agustiawan, to review the decision to increase the price of LPG gas.
         "The government should not hike prices at will, which will add to the people's burdens," he said.
         Pertamina has hiked the selling price of non-subsidized 12-kg cylinders of liquefied petroleum gas by about 68 percent, effective January 1, 2014. Deputy President of Pertamina's Communications Affairs Ali Mundakir reported Wednesday that his company had raised the price in an effort to shore up Pertamina's losses in the 12-kg cylinder gas business, which reached about Rp6 trillion in 2013.

 
         "The new price simultaneously became effective across the country on January 1, 2014. The new price of non-subsidized 12-kg cylinder gas translates to an average increase of Rp3,959 per kg for the consumer," Mundakir added.  
     With the increase of Rp3,959 per kg, the new price of non-subsidized gas has reached Rp47,508 per 12-kg cylinder gas. Before the hike, the price of a 12-kg cylinder gas was Rp5,850 per kg, or Rp70,200 per 12-kg cylinder, which had been effective since 2009.

         Thus, the price of the 12-kg non-subsidized LPG cylinder will become Rp117,708. He pointed out that even though Pertamina had raised the price of LPG, it will still absorb a loss of Rp2,100 per kg.
         "This is because the basic production cost of LPG has reached Rp10,785 per kg," he stated.
         However, a state company exploiting resources that affect the life of the people should be wise and sensitive in taking such a decision.
         General Chairman of the Green Indonesia Energy Rise (BENIH) Faisal Yusuf said the government should be sensitive to gas price increases that put a heavy burden on the people.
         "Pertamina is a state company. It should consult all stakeholders if it is to take a decision that would affect the life of the people," Yusuf stressed, while criticizing as baseless a statement by Chief Economic Minister Hatta Rajasa, who has said that the government had no authority to intervene in Pertamina's decision to set prices. The government can only intervene with regard to subsidies.
         He said that Pertamina is a state instrument, which should operate based upon Article 33 of the 1945 Constitution that stated that the land, waters and natural resources should be under the powers of the State and be used for the greatest benefit of the people.
         Chairman of the Indonesian Regional Representatives Council (DPD) Irman Gusman has suggested that Pertamina act wisely in raising prices in its attempt to curtail its business losses. "Pertamina should not act as if it was a purely profit-oriented company," Gusman said.
          He added that Pertamina should seek a wise way to reduce losses, not by raising the price of gas in 12-kg cylinders. In this case, the government should control Pertamina, which is a state-owned company.
          Gusman stressed that the policy to hike prices was not a wise step, as it burdened the people and the price increase needs to be postponed so it would not add difficulties for the public. "Now we have a high rate of inflation while the value of people's income is declining. In remote areas, in Papua for instance, the price of gas in 12-kg cylinders reached over Rp300 thousand each," Gusman claimed.
         He suggested that the government evaluate the policy of gas price hikes and try to find a better method.
         Legislator Gusti Iskandar Sukma Alamsyah also said that the increase by 68 percent of LPG price is illogical. Alamsyah, who is a member of Commission VII of the DPR for energy affairs, said that his commission would ask Pertamina to evaluate its decision.
         Contacted by Antara by phone on Friday, Alamsyah said his commission would soon summon Pertamina to answer questions about the price hike of gas. "The hike of gas prices by 68 percent is beyond propriety. The government should not remain silent," the legislator stated.
         Therefore, the House Commission VII will ask Pertamina to evaluate the price hike to ease the burden of the people.
         "Pertamina should not think of profits only. It should consider the people's socio-economic conditions, as well. Moreover, the country is facing a legislative and presidential election this year," he noted.
         The significant rise of gas prices left the impression that the  government's policies were not in favor of the people. This should inspire the government to assist the people in the face of this price hike.
         In the meantime, economic observer Acuvarta Kurtubi of Bandung-based Pasundan University said that the gas price increase of 68 percent would have an effect on the economy, such as triggering inflation this month.
         "It is a surprising thing to hear about the significant increase of the gas price at the beginning of the year. The government and all sides should be wise in taking steps so it will not have a large impact. But one thing, for sure, is that it will have an impact on the economy and on inflation," said Acuviarta in Bandung, West Java, on Friday.
         Acuviarta added that the effect of the gas price hike on inflation was relatively large, as inflation in 2013 was high and it would burden the people.
         It will also have an impact on the investment climate. Investors will likely reconsider their investment plans or wait for better conditions. "It will also have an effect on investments, though it will not be significant, she said.
         Meanwhile, chairman of the Indonesian Chamber of Commerce and Industry (Kadin) for West Java, Deden Y Hidayat, said the gas price hike was greatly felt by small-scale businesses that consume LPG.
        "Small-scale businesses, particularly those doing business in such sectors as hotels, restaurants and the housing industry, will greatly feel the impact of the gas price hike," said Deden Hidayat.***2***
(T.A014/INE/H-YH)
(EDITED BY INE)



(T.A014/A/BESSR/A/Yosep) 04-01-2014 20:25:

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