“The longer it takes, the more damage to the industry."
pipa gas Pertamina
Arief Kamaludin|KATADATA

The government has not been able to realise its plan of lowering industrial gas prices. It is currently reviewing the costs of industries in the upstream oil and gas sector in an effort to lower gas prices. Deputy Chief of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) M.I. Zikurallah said he was asked to review the potentials for lowering gas prices during a coordination meeting at the Coordinating Ministry for Economic Affairs.

He did not, however, explain what types of costs could be cut. The SKK Migas is scheduled to finish this review in ten days. “We will try to detail the costs one by one. This was a directive from the boss,” he said after the coordination meeting on Monday (29/8).

(Read: Cross-Ministerial Team to Review Upstream Gas Prices)

Lowering gas prices was one of the items in the economic policy package launched by President Joko Widodo in October 2015. However, the government has failed to realise this plan so far. The government has actually launched two regulations concerning this matter, which are Presidential Regulation (Perpres) No. 40/ 2016 and Energy and Mineral Resources (EMR) Minister's Regulation No. 16/ 2016.

Both of these regulations set gas prices at maximum US$ 6 per mmbtu for the fertiliser, petrochemical, oleochemical, steel, ceramics, glass and glove industries.

This lowered price came into effect on 1 January 2016 and would be applied retroactively. At that time, it was not possible to lower gas prices because the government was still waiting for the Industry Ministry to submit its list of industries.

Industry Minister Airlangga Hartarto once proposed three additional industries should be able to enjoy lower gas prices. These industries included the pulp and paper, food and beverage, and textile and footwear industries. (Read: Government Launches Regulation on Discount Gas Prices for Seven Industries)

He also proposed lowering benchmark gas prices. This was expected to lower gas prices further from US$ 6 per mmbtu to US$ 4 per mmbtu.

Director General of Chemical, Textile and Miscellaneous Industries Achmad Sigit Dwiwahjono added that the EMR Minister could change the list of industries that would be able to enjoy lower gas prices. The SKK Migas is currently reviewing the industrial costs of the upstream oil and gas sector to calculate possible gas prices.

He expects the implementation of lower gas prices will not be delayed for too long. “The longer it takes, the more damage to the industry,” he said.

Meanwhile, Pertamina President Director Dwi Soetjipto said yesterday's coordination meeting came to no conclusion. However, Pertamina is still committed to operating as efficiently as possible as an effort to help lower gas prices.

Dwi said if Pertamina does not operate efficiently, then it cannot grow. “We are studying how to get the best price. The reality in one place than it is in another place,” he said.

Data from SKK Migas shows gas prices are still too high. In East Java, gas prices are US$ 8.01 - US$ 8.05 per mmbtu. In West Java, the range is US$ 9.14 - US$ 9.18 per mmbtu. Meanwhile, gas prices are US$ 13.90 - US$ 13.94 per mmbtu in Sumatra. (Read: Three Requirements for Lower Gas Prices)

Gas prices in Indonesia are three times as much as in other countries. In some other countries, such as Japan, South Korea and China, gas only costs around US$ 4 – US$ 4.55 per mmbtu.