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Tuesday, October 18, 2016

The Margin of the Commercial Gas Business Actor Will Be Regulated



The government plans to regulate the margins of natural gas trading businesses so that selling prices at the industrial level become more competitive. All this time, the selling price of gas has been determined by gas trading businesses, so that the selling price has the potential to be unnatural.

Director-General of Oil and Gas of the Ministry of Energy and Mineral Resources (ESDM) I Gusti Nyoman Wiratmaja Puja said the government would also set an internal rate of return / IRR ratio of 12% for the level of investment risk which is classified as low and medium.

The reasonable margin provisions will be added in the revised Minister of Energy and Mineral Resources Regulation No. 19 of 2009 concerning Natural Gas Business Activities through Pipelines which regulates the determination of the selling price of gas.

"If the risk is high, it can be higher, if it is low, it can be lower. The average margin is 12%, "he said.

In addition, the government prioritizes the fertilizer and petrochemical industries to obtain gas prices which are cheaper than other industries because of their gas demand and more than 50%. He acknowledged that efforts to cut gas prices for industries are very complex. Because in addition to adjusting the price of the contract that was signed, he also had to list the types of industries entitled to get gas price discounts.

From the Ministry of Industry data, the fertilizer industry has a gas price composition in the production cost of 70%, the petrochemical industry 70%, the pulp and paper industry 8% -32%, the steel industry and other metal products 70%, the ceramic industry 20%, the glass industry and bottles 25%, the food, and beverage industry 10% -25%, the tire, and rubber gloves industry 7% -10%, the oleochemical industry 15% -25% and the textile and footwear industry 8% - 32%.

"We see which cases can take precedence, for example, fertilizer. Fertilizer, we prioritize petrochemicals to cut gas prices, because they really need it. "

Head of the Regulatory Agency for Upstream Oil and Gas (BPH Migas) Andy Noorsaman Sommeng said the decline in gas prices will not have a significant impact on industries whose gas consumption levels are relatively small.

According to him, the government can consider added value such as industries that have high competitiveness. For example, he said, the rubber glove industry could have a discount on gas prices as long as it has a good international report card.

Director of PT Perusahaan Gas Negara (Persero) Tbk. Danny Praditya said, the company supports the government's move related to the implementation of margins or regulated margins for gas trading business entities.

"As a national gas management SOE, support government initiatives to optimize the use of natural gas for the industrial sector."

He hopes that all parties see proportionally and valid data related to gas prices. The impact of the economic slowdown, according to him, will also affect the volume of gas sales in the second semester of 2016. In the first semester of 2016, the volume of gas distributed was 796 MMscfd through distribution and 816 MMSCFD through transmission pipelines. The use of gas as fuel has made micro, small and medium enterprises (MSMEs) more efficient.

Bisnis Indonesia, Page-30, Tuesday, Oct 18, 2016



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