Jakarta, Feb 6 (Antara) - In line with the downward trend in the world oil prices, the industrial sector has called on the government to reduce the price of gas at home to ensure that their products remain competitive.
At least two associations representing the industry made the appeal, namely the Indonesian Chemical Industries Federation (FIKI) and the Indonesian Olefin and Plastic Association (INAPLAS).
"The government needs to adjust the gas prices in step with the world price trend. The price of gas is now going down in the world," Ridwan Adipoetra, secretary general of the FIKI, said here on Wednesday (Feb 3).
He said the world crude price has now dropped 75 percent to US$30 per barrel. Accordingly, the government lowered the prices of fuels through its third economic policy package. Unfortunately, the price of gas has not yet been lowered.
If this state of affairs was allowed to continue, it will make chemical industries at home difficult to compete. The gas price has been adjusted only for the fertilizer industry where the government has lowered it from US$10 per 1 million British thermal units (mmbtu) to US$7 per 1 mmbtu.
Ridwan said chemical industries are not asking the government to slash the gas price by 75 percent, but a cut of 20 percent in the present price of US$8 to US$10 per one mmbtu will help significantly.
He said even though gas prices vary in various countries, they nevertheless reflect a downward trend. If the average price is calculated, it may be found to have plunged to US$5 per 1 mmbtu. Thus, the high price at home will make it difficult for the industries to develop.
Ridwan said the present scenario has left the chemical industries in a limbo as they are finding it difficult to compete in the global export market as also on the domestic sale front since the purchasing power of consumers at home has also been declining.
According to Ridwan, the current domestic price will affect industries using gas as a raw material. These are largely chemical and ceramic industries where the average gas cost component is in the range of 10 to 50 percent.
The secretary general of INAPLAS, Fajar Budiono, also expressed a similar view, arguing that the present price of gas not yet budged from US$8.5 to US$10 per 1 mmbtu. Seeing the price in the world market, the gas price at home could be lowered to below US$6 per 1 mmbtu.
The differential in prices at home and abroad will pose difficulties for the chemical industries, making them unable to compete. It is a serious challenge when seen in the context that Indonesia has now entered the ASEAN Economic Community era. Other ASEAN countries have already effected a gas price adjustment.
Fajar claimed his organization has asked the Ministry of Industry at various forums to adjust the price of gas as per the market realities.
Fajar said if the price is still set at US$80-S$10 per 1 mmbtu, chemical and plastic industries were likely to opt for raw material substitution, preferring coal instead of gas.
He said it was possible to switch to using coal because petrochemical industries did use coal in the beginning. The sector may also start using diesel oil because its price is now Rp6,200 per liter, well within the industry's reach.
The problem is that there are still industries which had thus far used 100 percent gas and could not use a substitute. Such is their dependence on gas.
Actually, the government is planning to go in for a new gas price formulation, Director General of oil and gas of the Ministry of Energy and Mineral Resources ESDM, I Gusti Nyoman Wiratmaja, said.
He said his side has proposed a new gas price formulation to arrive at a fair national gas price.
His office has come up with a proposal to link the price of gas to the price of oil and products. Any hike in the oil price would also drive up the price of gas, he explained.
However, the gas price will also go down if the oil price drops, as had been happening till now.
The change in the gas price formula will be included in the revision of ESDM minister's decree No. 19/2010 on Pipeline Natural Gas Business Activities, Wiratmaja said.
Therefore, his side is willing to know soon whether the new price formulation could be applied or not so that the formulation could be included in the decision on gas governance.
"We hope a decision would be taken in the first semester of this year," he said.
The government's plan to change the formulation of gas prices must be put in place transparently so that the state-owned companies in charge of selling gas are no longer able to set a price in an opaque or unilateral manner, an economist said.
The government's move to decide a new gas price formulation was a positive one because it would be fair to consumers at home, economist Drajad Wibowo of the Sustainable Development Indonesia (SDI), said Saturday.
"State companies assigned to sell gas should be transparent in setting the price for consumers. It should not disadvantage businesses or harm the interest of the people by opting to implement a unilateral price," he said.
Transparent pricing could be carried out online so that consumers could see the real price and business players could also make calculations to see whether the set price is reasonable or not, he said.
Gas state companies are obligated to be transparent because they used a lot of state funds in many forms, including in the form of state capital participation, subsidies and others, he added.
The change in the price formulation is, indeed, needed. Moreover, at present, the world oil prices are going down. With the change in the formulation of gas price, the people would not be burdened.
The new gas price formulation will boost economic growth at the grass-root level.
"The government must change a regulation which is unfair to the people," Drajad noted.
Earlier, deputy chairman of the Indonesian Employers Association (Apindo) for North Sumatra, Ng Pinpin, complained of the attitude of the state gas distributor (PGN), which is not being open regarding setting the gas price. he also mentioned the issue of price of gas procured from the plants in Arun and in Pangkalan Susu that should be blended.
He also complained that PGN was imposing a surcharge and a minimal cost, and such a price policy was burdening the industries.
The surcharge, which is 150 percent of the normal price, is imposed on those industries which consumed gas exceeding their quota while the minimal cost is imposed on industries procuring gas below the limit decided by the PGN.
If industries buy gas below the minimal limit volume, they are required to pay a price up to the set minimal limit.***3***(A014/INE)DITED BY INE/H-YH(T.A014/A/BESSR/A/Yosep) 06-02-2016 19:56: |
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