The potential income is US$ 544 million per year if the government does not collect non-tax state revenue (PNBP) and has the potential to lose US$ 1.26 billion if the government does not collect taxes and PNBP at all. The reason is, there are 50 gas sales and purchase contracts that must be compensated.
At the downstream level, tiered traders will be removed in order to reduce the gas distribution chain which has been detrimental to consumers. The industrial sector which receives lower gas prices is expected to be efficient in terms of the use of gas, both as raw material and as fuel.
Director of Industrial Energy Conservation at the Ministry of Energy and Mineral Resources, Farida Zed, emphasized that if low gas prices are not accompanied by the industry's desire to streamline its activities, the competitiveness of the industry will not increase significantly. According to him, energy efficiency can actually be done in several ways.
First, efficiency without incurring costs by changing behavior. Second, by changing old technology into new technology that is more efficient. The Directorate General of Chemical, Textile, and Miscellaneous Industries at the Ministry of Industry, Achmad Sigit Dwi Wahjono, said that only 50 percent of industries, such as fertilizers, had improved their technology.
Likewise with the glass, textile, and ceramic industries. According to him, replacing technology requires a large investment, Petrokimia costs around Rp 4 trillion-Rp 5 trillion, fertilizer once an investment of Rp 5 trillion. Industry players appreciate the government's decision to lower gas prices. Vice President of Corporate Relations of PT Chandra Asri Petrochemical, Suhat Miyarso, said that the decline in gas prices to US$ 6 per MMBtu had a positive impact on production cost efficiency.
Suhat said the decline in gas prices would encourage the company to realize the plan to develop the Methanol industry into olefins in Bintuni Bay, West Papua. According to the plan, the plant has a capacity of about 1 million tons of methanol and produces 400,000 tons of polypropylene.
The investment value is US$ 2 billion. For a new project, if the gas price is feasible, we want to use gas for raw materials by building a methanol factory to convert olefins. Marketing Director of PT Krakatau Steel Dadang Danusiri added that the company accepts any government decision.
According to him, the gas price of US$ 6 per MMBtu will have an impact on the efficiency of the company's production costs. Initially, the company hoped that the gas price in the sector would not exceed US$ 5 per MMBtu so that the direct reduced iron facility that produces slabs and billets could be reproduced so that the price of slabs can be more competitive and the price of Hot Rolled Coil (HRC) can be sold cheaper.
Head of Corporate Communication of PT Pupuk Indonesia Wijaya, said that the company remains committed to providing subsidized fertilizers which reached 9.50 million tons this year, even though gas prices fell to only US$ 6 per MMBtu. However, he believes the operational costs of his factory in Aceh can be up to 25% efficient. Previously, data from the Ministry of Industry revealed that fertilizer businesses asked the government to reduce gas prices to US$ 3-US$ 4 per MMBtu.
Bisnis Indonesia, Page-1, Thursday, Nov 24, 2016
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