Jakarta. The government has not yet realized its promise to reduce industrial gas prices due to the unfinished formulation. As of the third week of November 2016, the government will just finalize the formulations to reduce gas prices for three industries, namely petrochemical, fertilizer and steel industries.

"The maximum price of gas for these three sectors is at US $ 6 per mmbtu," said Ignatius Jonan, Minister of Energy and Mineral Resources (ESDM) on Thursday (17/11).

According to him, the decline in gas prices for the three sectors of the industry will be finalized next week. According to the plan, the Ministry of Energy and Mineral Resources will issue a ministerial regulation as a legal umbrella to reduce the gas prices for the three sectors of the industry.

Jonan added that after the regulation issuance, the decline in industrial gas prices for the three sectors, including petrochemicals, fertilizers and steel will go into effect on 1 January 2017. Initially, the government promised to reduce the gas prices for industry on 1 January 2016.

Director General of Metal, Machinery, Transportation and Electronics Industries at the Ministry of Industry I Gusti Putu Suryawirawan added that during the coordination meeting held at the office of Coordinating Minister for Economic Affairs (Thursday, 18/11), the government has not yet decided the reduction of in industrial gas prices, except for the three sectors.

According to Putu, the meeting only decided the mechanism of calculating for reducing the gas prices for other sectors. "The mechanism includes calculation components, such the price of upstream gas, efficiency components, and the final price of industrial production. Therefore, if the price of industrial products increases, the gas provider may also be benefitted,” he said.

After the mechanism is determined, the government will set a price reduction for gas of other industrial sectors. As an information, the Presidential Regulation No 40/2016 on Natural Gas Pricing, there are seven industrial sectors that can enjoy the decrease in gas prices, namely the fertilizer, petrochemical, oleochemical, steel, ceramic, glass, and industrial rubber gloves industries.

Beyond the seven sectors, the Ministry of Industry also proposed additional industries, which area eligible for gas price reduction, namely food and beverages, pulp, paper, textile, foot wear, and tire industries.

Putu hoped that the discussion on gas price reduction for the entire industry could be completed next week. So, it can in meet the target of President Joko Widodo.

Previously, during the limited meeting in the last October, President Joko Widodo had asked the relevant ministers to finalize the discussion on gas price reduction for industry in November 2016.

To complete the entire formulation of gas price for industry, last week, the government had formed a small team consisting of the director generals in the Ministry of Energy, Ministry of Industry, as well as Deputies at Ministry of SOEs and the Ministry of Finance. This team has 10 days to estimate the formula of gas price reduction for each industry sector.

(Muhammad Farid/Translator)

Editor: Adi Wikanto