Gas Transmission Cost Pivotal in Gas Price Reduction: Energy Minister

Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif delivers an online press conference, Wednesday (18/3). Photo by: PR/Agung

To reduce gas price to US$ 6 per mmbtu, the upstream gas price should be reduced to US$ 4 – US$4.5 per million British thermal unit (mmbtu) and transmission and distribution costs should be reduced to US$1.5 to US$ 2 per mmbtu, according to Minister of Energy and Mineral Resources Arifin Tasrif.

“The Government revenue will be reduced, but it can be compensated by reduction of the cost of subsidies and the cost of compensation and there is another contribution in the form of dividend tax and also the conversion of raw materials to convert power plants from diesel to gas,” the Minister said in an online press conference, Wednesday (18/3).

Regarding transportation costs, he said that the Ministry will also discuss the matter with the main transport providers.

“We will consider depreciation factor for investments that have been operating for 10-12 years and have generating efficiency in the company with a significant contribution. We strive to provide the pipe to meet the capacity of gas allocation. We will ask gas transporters to open access to other gas suppliers to increase the volume,” Arifin said, adding that Indonesia has Sakakemang natural gas field to operate in 2021 and starting from 2023 the exported gas will be allocated for domestic market.

“We will continue to develop our gas infrastructure. We must be able to install pipelines from Aceh province to East Java province as well in the islands of Sulawesi and Kalimantan. It takes two to three years. In addition to the pipeline, we must also provide more receiving terminals so that the LNG can be accommodated at the Receiving terminal to be distributed to users,” he said.

The new gas price, according to the Minister, will apply on 1 April.

“Surely it requires hard work from all stakeholders. I need support from the relevant government ministries and institutions,” he said. (HIM/EN)

Translated by: Ridwan Ibadurrohman
Reviewed by: M. Ersan Pamungkas