Government to Accelerate Kerosene Conversion Program
Thursday, 31 August, 2006 | 19:48 WIB
TEMPO Interactive, Jakarta: The government is to accelerate the kerosene conversion to liquefied natural gas (LPG) program from six to four years.
The total of kerosene to be converted is targeted to reach 90 percent of kerosene consumption, or around10 million kiloliters.
“We can do this because Indonesia is an LPG producer,” said Vice President Jusuf Kalla when visiting Pertamina yesterday (30/8).
Previously, the government allocated a total of Rp1.93 trillion in funds for the kerosene conversion program.
This program is based on a letter from Energy and Mineral Resources Minister Purnomo Yusgiantoro to the Coordinating Minister for the Economy, the Finance Minister, the Director General of Oil and Gas and PT Pertamina.
The funds are from the reduction of kerosene subsidies that are being transferred to LPG.
From this program, it is estimated that there will be a reduction in kerosene consumption amounting to 988,280 kiloliters and LPG consumption will rise to 567,700 tons.
Currently, the LPG sales price on the domestic market is Rp4,250 per kilogram.
Nevertheless, some LPG is imported by Pertamina at a cost of between Rp6,000 and Rp7,000 per kilogram.
Therefore, so far Pertamina has been subsidizing domestic consumers by between Rp1,750 and Rp2,750 per kilogram.
This year LPG consumption is one million tons on average.
Vice President Jusuf Kalla explained that if this can be achieved, there will be a saving of Rp30 trillion in subsidies over four years.
However, additional investment amounting to Rp15 trillion is required.
“We will ask the private sector to join in this program,” he said.
Based on random testing of LPG conversion by Pertamina, said Kalla, the results are that 85 percent of consumers have changed from kerosene to LPG.
Muhamad Fasabeni and Nieke