Pertamina raises LPG price<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
State oil and gas company Pertamina announced on Sunday an
\nincrease in the price of liquefied petroleum gas (LPG) by 5.3
\npercent, or Rp 150 per kilogram, to cover rising production costs
\namid higher international crude prices.<\/p>\n
The company also intends to raise the price again later this
\nyear in order to break even.<\/p>\n
The new price of Rp 3,000 (35 U.S. cents) per kilogram,
\neffective as of Monday, will therefore increase the price of the
\nwidely used 12-kilogram LPG tanks from Rp 34,200 (US$4.02) to Rp
\n36,000 per tank.<\/p>\n
Customers outside a 60-kilometer radius of Pertamina's main
\nLPG installations and refilling stations will also be subject to
\nadditional transportation fees.<\/p>\n
Pertamina deputy director for marketing and trade Rahmat
\nDrajat refused to say when the next hike would occur and merely
\nexplained that Pertamina had decided to phase the hikes to reduce
\nthe economic, social and possible political impacts, particularly
\nduring the election year.<\/p>\n
The government has decided not to increase fuel or electricity
\nprices this year for fear of severe social and political impacts.<\/p>\n
Pertamina last raised the price of LPG in August last year
\nfrom Rp 2,700 to Rp 2,850 per kilogram in all areas except Batam,
\nwhich saw a higher price to discourage smuggling of the fuel to
\nneighboring Singapore. Customers in Batam will not be affected by
\nthe new price as they have been paying a higher price of Rp 3,500
\nper kilogram, a price level Pertamina described as equal to those
\nin neighboring countries.<\/p>\n
\"Pertamina can no longer afford to suffer losses to subsidize
\nLPG, when the commodity is showing economic potential,\" Rahmat
\nsaid. \"Its price should also be brought to a level where other
\ncompanies will be interested in becoming industry players.\"<\/p>\n
As mandated by Law No. 22\/2001 on oil and gas, Pertamina has
\nended its decades-long monopoly in the sector.<\/p>\n
But Rachmat explained that despite strong demand for LPG in
\nthe country, private companies had been reluctant to enter the
\nLPG business as Pertamina kept subsidizing the price of its LPG
\nproducts.<\/p>\n
Data from Pertamina shows that domestic LPG demand has seen an
\nannual growth of 15 percent to 20 percent over the past several
\nyears. This year alone, the growth is estimated to be about 20
\npercent -- from 83,000 metric tons per month last year to about
\n100,000 this year.<\/p>\n
However, since Pertamina's annual LPG production is only
\n80,000 metric tons, it will have to import the remainder.<\/p>\n
Rahmat refused to disclose Pertamina's exact losses from its
\nLPG business, and only explained that its basic cost for
\nproducing LPG was about $226 per metric ton, and that it needed
\nan LPG price of about Rp 3,500 to make a profit.<\/p>\n
The Indonesian Consumers Foundation (YLKI) criticized the
\nhike, saying Pertamina had not been transparent with its
\nfinancial affairs, and that the company never improved its
\nservices despite raising prices several times.<\/p>\n
\"Many customers have been complaining about the distributed
\ntanks, which are dangerously in poor condition or contain less
\nthan they are supposed to,\" said YLKI member Daryatmo.<\/p>\n
Last month, LPG customers in Greater Jakarta also suffered a
\nshortage of supply due to a delay in imported LPG.<\/p>",
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"sponsor": "Okusi Associates",
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