The Indonesian government has decided to increase the price of industrial gas by 50 percent, with the increase to be done in two stages.
The agreed increase is only slightly lower than the 55 percent proposed by state gas company Perusahaan Gas Negara (PGN).
“The increase won’t be 55 percent, but 50 percent; only reduced slightly,” Energy and Mineral Resources Minister Jero Wacik said after a cabinet meeting at the Presidential Palace in Jakarta on Thursday.
“Starting from September 1, the price will be up by 35 percent, and starting from April 1, 2013, it will further increase by 15 percent,” he added.
Jero explained that the increases would only be done after Idul Fitri, which will be around Aug. 19-20, citing increased use of industrial gas to support production ahead of the Islamic holiday.
He reiterated the need for the price increase, saying the upstream industrial gas price in the country had been set too low.
Industry Minister M.S. Hidayat said the 50 percent increase was most reasonable, and that it was decided after the industrial sector rejected the 55 percent rise proposed by PGN on the basis that it would lower Indonesia’s competitiveness.
He further explained that with the price of industrial gas on the international market now standing at $16 per mmbtu, a 50 percent increase meant the price would be less than $10 per mmbtu. A 55 percent increase would have brought the price to $10.60 per mmbtu.