Gov’t Announces Low Gas Price for PT PLN’s Power Plants
Date 28 April 2020
The Government has announced adjustment in gas price for power plants operated by state-owned electricity company PT PLN to US$6 per million British thermal unit (mmbtu).
The decision was based on Regulation of Minister of Energy and Mineral Resources Number 10 of 2020 on Amendment to Regulation of Minister of Energy and Mineral Resources Number 45 of 2017 on Utilization of Natural Gas for Power Plants.
According to Head of Energy Ministry’s Communication of Public Information Services and Cooperation Bureau Agung Pribadi, several provisions in Regulation of Minister of Energy and Mineral Resources Number 45 of 2017 have been amended.
“Article 1 number 5, for example, the Electricity Generating Business Entity (BUPTL) is previously a business entity holding a business license for supplying electricity. Then the BUPTL is converted into a business entity holding a power supply business permit that includes a power plant developer (PPL) and a business area holder, which has a power purchase agreement or operation cooperation (KSO) with PT PLN (Persero),” Agung said.
Article 4 has also been amended so it reads “Aside from supplies obtained from the allocation of natural gas as referred to in Article 3 paragraph (2), PT PLN (Persero) and/or BUPTL may obtain supplies of natural gas from business entities holding a natural gas trading business license that obtains natural gas allocation insofar as the business entity provides natural gas facilities or infrastructure.
“Related to natural gas prices, Article 8 of Regulation of Minister of Energy and Mineral Resources Number 10 of 2020 stated that PT PLN (Persero) and BUPTL may purchase natural gas through pipes with natural gas prices at the plant gate, the highest price is at US$6 per mmbtu,” he said.
In the event that the prices of natural gas at the plant gate is higher than US$ 6 per mmbtu or natural gas comes from compressed natural gas (CNG), the Minister shall determine the price of natural gas at the plant gate based on the adjusting calculations to the prices of natural gas purchased from the contractor and added to the costs of distribution consisting of transportation cost and natural gas midstream cost.
“Adjustments to the prices of natural gas shall not affect the amount of revenue that is part of the contractor. This price adjustment is a deduction from the state’s share of revenue calculated through profit sharing in accordance with the Cooperation Contract of a Working Area in the current year. The reduction amount from the state’s share of revenue is the highest as the state’s portion in the current year,” Agung said.
In applying the price of natural gas at the plant gate, the Minister may assign a state-owned enterprise and/or its affiliates engaged in natural gas business activities to carry out the distribution of natural gas to PT PLN (Persero) and/or BUPTL.
“State-owned enterprises and/or affiliates that distribute natural gas to PT PLN (Persero) and/or BUPTL may be given proportional incentives,” he said.
In the meantime, the Downstream Oil and Gas Regulatory Agency (BPH Migas) shall coordinate and determine the adjustment of transportation cost of natural gas through the pipeline.
“When this Ministerial Regulation comes into force, the price of natural gas at the plant gate for the needs of power plants that have been determined the highest amount of US$6 per mmbtu, between PT PLN (Persero) or BUPTL and the Contractor and/or business entity that holds a natural gas business license shall remain in place,” he said. (Ministry of Energy and Mineral Resources’ KLIK Bureau)
Reviewed by: M. Ersan Pamungkas