Jakarta, May 19 (Antara) - Amidst complaints of low gas consumption at home and an increase in the commodity's export, the government has cuts prices of gas for seven types of industries.
The lowering of gas prices for industries was announced as part of a presidential regulation on gas prices signed by President Joko Widodo (Jokowi) on May 3.
The seven industrial sectors, which will benefit from the lowered gas prices, are the fertilizer industry, petrochemicals, oleo chemicals, steel, ceramics, glass and rubber gloves.
However, the regulation does not mention the power generation sector, which also enjoys a gas price cut.
"I had heard that the Presidential Regulation (Perpres) on gas prices has been issued. This means that the downstream gas consumption will increase as there will be a price adjustment," Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) Deputy Head, Zikrullah said in Jakarta on Thursday.
He further stated that SKK Migas welcomed the Presidential Regulation on Natural Gas Prices. According to Zikrullah, the new regulation is expected to increase downstream gas consumption as the new ruling contains price adjustments.
Perpres, which lowers gas price and is retroactive from January 1, 2016, will regulate government cuts on the prices of gas for seven sectors of industries to accelerate economic growth and increase the competitive edge of the national industry.
Based on the Perpres signed by President Jokowi on May 3, gas prices have been lowered by reducing the gas portion that belongs to the state. The portion that belongs to the production-sharing contractor companies (KKKS) will not be reduced.
It also states that gas prices will be decided by considering the economic viability in the field, prices in the global and domestic markets, the purchasing power of consumers at home and the added value of the gas utilization.
If gas prices in the field do not meet the economic viability of consumer industries, the government will set certain prices for them or provide them with a subsidy. The selling price of gas from the KKKS is set by the government at a maximum of US$6 per million metric british thermal unit (MMBTU).
The determination of subsidized gas prices will be done by considering the availability of natural gas and economic growth, which can be obtained through the utilization of gas.
Based on the government's calculation in Perpres, if the gas price goes down by US$1 per MMBTU, it will create a positive impact on the tax receipt of Rp12.3 trillion and a positive spread effect of Rp68.9 trillion on the economy.
If the gas price drops by US$2 per MMBTU, the positive effect will result in tax revenues rising by another 12 trillion to Rp14 trillion and its effect on the economy will earn the country an income of Rp68 trillion to Rp123 trillion.
"The gas production portion that belongs to the KKKS will not be reduced. The gas portion that will be reduced is the one that belongs to the government. This government policy is mainly aimed at revitalizing the country's economy," noted Zikrullah.
Regarding gas exports, Zikrullah clarified that the decision to export gas was taken to capitalize on surplus production and was not meant to overlook domestic needs.
"We have surplus gas, which cannot be used domestically. Are we going to allow the surplus gas to be stored and not be utilized? We should clarify to the public that gas is being exported not in a bid to avoid meeting domestic demand," Zikrullah stated at an event highlighting achievements in gas exploration here on Thursday.
Zikrullah made the statement in response to the common public perception that a significant volume of natural resources, particularly gas, was being exported rather than catering to domestic demand.
SKK Migas is always ready to fulfill domestic demand. Moreover, Indonesia still has vast gas reserves, particularly in isolated areas. The nation's gas production, in the form of piped gas reserves and liquefied natural gas, including gas fields that are yet to be developed, will continue to be used to meet domestic demand.
However, the surplus gas cannot be absorbed by the country as the production exceeds domestic requirements. "This should become our focus. It should not happen that the public makes accusations that we only prefer to export gas," Zikrullah emphasized.
According to him, gas exports also offer benefits to the state in the form of foreign exchange to help develop the country. "What we enjoy is development as the state is able to generate revenue. However, it should also be synchronized. After all, the market has not yet developed at home," he asserted.
In the meantime, according to Energy and Mineral Resources Minister Sudirman Said, the government hopes to build a gas pipe network for 5 million household consumers in the next decade at a cost of Rp70 trillion.
Utilization of gas as a household fuel is more efficient, the minister said at the ground breaking ceremony for a gas network project in East Java last week.
In five years or by 2019, networks of gas pipes are expected to be installed in 1.3 million households, with an investment of Rp18.2 trillion.
The projects will be financed with funds from the state budget, state-owned energy company PT Pertamina and state-owned gas company Perusahaan Gas Negara (PGN).
With 1.3 million households using gas for fuel, the country is estimated to save Rp936 billion a year, Sudirman noted.
Most households and commercial consumers in urban areas in the country use liquefied petroleum gas (LPG), which is relatively expensive.
Based on the availability of gas and infrastructure for transmission pipelines in 38 cities, gas could be distributed to around 7.9 million households at a cost of Rp111.3 trillion, Sudirman explained.
So far the government has already built a gas pipe network serving 204,766 households in a number of cities in Indonesia, including pipes built by Pertamina and PGN.
Regarding gas exports, Chief Maritime Affairs Minister, Rizal Ramli had earlier highlighted the importance of changing the exploit-and-export paradigm of the country's natural resources, which had been in practice for long in Indonesia.
According to the minister, the paradigm should be changed to one that ensures the management of natural resources to offer added value to the country.
Rizal also emphasized that the country should not export its gas production in the form of LNG as it only generates profits worth US$2.5 billion per year.
He also reiterated President Joko Widodo's administration¿s clear vision to use natural resources optimally for the benefit of the Indonesian people.
"To this end, the paradigm of development must change, and it should no longer be mainly focused on exports. Instead, we must develop our processing industry," he stated. ***4***(A014/INE)EDITED BY INE/H-YH(T.A014/A/BESSR/A/Yosep) 19-05-2016 20:17:5 |
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