Luhut Binsar Pandjaitan
Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan has a number of strategies to reduce industrial gas prices. This was obtained after comparing with industrial gas prices in a number of neighboring countries, such as Malaysia and Thailand.
Luhut explained that his ministry will have a cost structure in the upstream gas sector first. It is estimated, from there it can be seen which parts can be reduced. According to him, one thing that can be done to reduce gas prices upstream is through cost recovery.
The second strategy is to reduce the government's share of production sharing contracts and taxes, such as Non-Tax State Income (PNPB). Luhut gave an example of Malaysia, which has cheaper industrial gas prices. Third, streamline transmission costs, such as toll fees and regasification.
The problem is, the conditions in each region are not the same. Likewise, the existing infrastructure also varies. The fourth alternative is to increase the efficiency of distribution costs, among others, by eliminating gas traders who do not have infrastructure.
In the future, Luhut does not want pipe owners who do not have gas supply. Luhut is sure that the plan to form a holding company, which combines PT Pertagas and PT PGN (Persero) Tbk, can reduce the price of industrial gas to US $ 6-7 per MMBTU. This is because the two companies have adequate infrastructure to support the decline in industrial gas prices.
Currently, the price of industrial gas at the end-user (consumer) level in Indonesia is US $ 8.3 per MMBTU, which is more expensive than Malaysia and Thailand. In Malaysia, the industrial gas price is US $ 6.6, per MMBTU and Thailand is US $ 7.5 per MMBTU.
He explained that the gas price structure in Indonesia is influenced by the upstream sector by 60 percent and the transmission sector by 22 percent. The rest, 18 percent, is influenced by the distribution and commercial sectors. Luhut said there were only three industries that really needed subsidies, namely the fertilizer industry, the petrochemical industry, and the steel and metal industry.
Of the 11 industries requiring subsidies, we identified only three that had to be subsidized. The reason is that the three industries are considered to have great added value in the downstream. In addition, in the three industries, gas is a major cost component, amounting to 70 percent.
Koran Tempo, Page-18, Wednesday, Oct 19, 2016
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