President Jokowi Calls for More Competitive Gas Prices
Date 6 Januari 2020
Gas is not only a commodity but also development capital that will strengthen national industry, according to President Joko “Jokowi” Widodo.
The President added that seven industrial sectors consume about 80 percent of Indonesia’s gas supply, including for electricity production, chemical substances, food, ceramic, steel, fertilizer, and glass industries.
“This means that when gas portion is substantial for the structure of production costs, gas prices will greatly affect the competitiveness of our industrial products on the global market. Our products continue to lose edge because of high industrial gas prices,” the President said in his introductory remarks at a limited meeting on the Gas Availability for Industry at the Presidential Office, Jakarta, Monday (56/1).
To that end, the President called on his Cabinet to calculate gas prices to make it more competitive and to examine the cause of high gas prices, starting from the upstream, midstream to downstream sectors.
The President also asked for an update on the implementation of Presidential Regulation Number 40 of 2016 on the Determination of Natural Gas Prices to find out whether obstacles prevail in the field, mainly in the industrial sectors that have been determined as users of the gas price reduction desired by the Government.
For the record, the President has considered three options, among others, by “reducing or even eliminating” the Government’s share of earnings from gas sales – about US$2.20 per 1 million British thermal units (mmbtu), implementing domestic market obligation (DMO) policy so that so that prices can be maintained, and easing imports of gas for industry.
President Jokowi further said that since 2016, industrial gas price has not been settled so that a breakthrough must be sought, adding that two other options are also to be taken into account, namely protecting industries or protecting gas players. (TGH/SM/JAY/ES)
Translated by: Muhardi
Reviewed by: M. Ersan Pamungkas