GAS PRICE RISE FOR INDUSTRY IN INDONESIA

According to the Head of Executive Agency Upstream Oil and Gas (BP Migas) R Priyono as the inauguration of the division heads and 14-level officials of BP Migas, the prices adjust to the price of economics.

The price of gas rises from the manufacturer. Related to industry demand not raise gas prices, according to Priyono, it was difficult to meet.

If industrial gas prices did not rise, upstream oil and gas industry will die, no one will invest because they do not profit. Thus, the price must correspond to upstream investment in fixed path, said Priyono.

So far, the allocation of gas for domestic needs from PT Perusahaan Gas Negara (PGN) is obvious. However, PGN gas flow difficulties to the end user because of limited gas infrastructure.

For industrial customers in the area of West Java, the allocation of gas supplies 329 million metric standard cubic feet per day (mmscfd).

Separately, the Company Secretary Sutopo PT PGN Wahid said, the current gas price 3.8 U.S. dollars per million british thermal unit (MMBTU) plus transportation costs.

The plan, as of 1 April 2010, gas price rises to 10-15 percent of the industry. PGN's gas prices follow from the proposed price of upstream industries and depending on where customers are.

In a number of buy-sell contract between PT PGN gas and a number of producers, gas prices have been rising, including from Medco and PT Pertamina HE ONWJ.

To meet the needs of industry, PGN additional needs new supply of a number of gas producers such as Medco. Additional gas supplies have risen compared with the reasons for the increase before the investment costs and to follow developments in world oil prices.

Especially since 2007 prices of industrial gases from PT PGN has not experienced an increase. Yet, other types of fuel, such as diesel, for the industry's first ride.

Another point in question is the business of gas supply deposit payment. According to Wahid, all industrial customers a guarantee of payment requested three months in the form of credit note (letter of credit / LC).

Thus, industrial customers do not have to pay in cash, enough with the L / C, gas is used first, and only pay cash, he said.

Industry also objected to the planned imposition of surcharge of about 200 percent by PGN for the gas industry taking over the deal.

PGN argued, it is to control the use by customers. If the use of appropriate contract, not subject to surcharge. Additional costs apply if you use above the maximum limit of the contract.

Therefore, its value should be high enough so that the consideration exceeds the customer before the contract.

Separately contacted, the Chairman of the Indonesian Employers Association Sofjan Wanandi asserted, businessmen objected to the increase in gas prices. Employers ask for a fair compromise for both sides so that no difficulty operating the industry.

What we wonder, Why is the government still allow the export of gas. Gas exports to Singapore were still high. The reason is a contract, can not be undone. What is clear is that we can never expressly decided the fulfillment of domestic gas supply before export, said Sofyan.