Industries oppose PGN’s 50 percent price increase

Rangga D. Fadillah, The Jakarta Post, Jakarta | Sat, 05/19/2012 8:00 AM

State power utility PT Perusahaan Listrik Negara (PLN) and industrial buyers including ceramic tile producers have voiced objection to state gas distributor PT Perusahaan Gas Negara’s (PGN) decision to increase gas prices for customers in West Java by 50 percent.

The company’s oil-based fuels and gas division head Suryadi Mardjoeki said the rise was too high, considering PLN used the resource to generate electricity for public purposes. He requested different treatment from other industrial customers.

“It’s better if the government, through [regulator] BPMigas, sets the allocation for PLN from the gas producers,” he told reporters at his office in Jakarta on Wednesday.

With that mechanism, PLN will directly pay gas producers. For the delivery, the gas would be channeled through PGN’s pipelines, he said. PLN would then pay the toll fees to PGN determined by upstream regulator BPH Migas, he added.

The increase in gas price will also hurt industrial customers in West Java especially ceramic tile producers. The head of the industrial and trade office at the West Java provincial administration, Ferry Sofwan, said the increase would severely impact ceramic producers, whose energy costs accounted for between 10 percent and 15 percent of their operating costs.

“If the operating costs increase it will be difficult for the local ceramic tile producers to compete. The consumers will opt for Chinese products, because they will be cheaper,” he said.

PGN has increased prices for customers in West Java from an average $6.80 per million British thermal units (Btu) to $10.20 after it renewed contracts with South Sumatran suppliers ConocoPhillips and Pertamina EP. Under the rew contracts, PGN pays $5.60 per million Btu for gas from the Grissik field in the Corridor block, operated by ConocoPhillips, up 202 percent from $1.85. The price will increase to $6.50 per million Btu in 2014. The the price of gas from the Pagardewa field, operated by Pertamina EP, has also been increased to $5.50 per million Btu, up 150 percent from $2.20.

Arya Dipa contributed to this story

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