Pertamina to float price of LPG to avoid losses<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
State-owned oil and gas company Pertamina, claiming that it
\nhas to shoulder losses from the current pricing system, will
\nfloat the price of liquefied petroleum gas (LPG) while
\ncontrolling fluctuations by applying floor and ceiling levels.<\/p>\n
Pertamina's downstream director Muchsin Bahar said on Monday
\nthat the planned price, which was set to take affect in August
\n2003, would be denominated in U.S. dollars and be pegged to
\nAramco's contract price (CP) development.<\/p>\n
\"The calculation will be like that for oil fuel prices, and it
\nwill be adjusted every month,\" Muchsin told reporters, adding
\nthat the company was still studying the figures for floor and
\nceiling prices.<\/p>\n
The current LPG price is fixed at Rp 2,700 (30 U.S. cents) per
\nkilogram.<\/p>\n
Muchsin said with the exchange rate of the rupiah standing at
\nRp 8,250 against the greenback, Pertamina suffered a loss of Rp
\n50 per kilogram.<\/p>\n
By applying the floating price, the volatility of the LPG
\nprice would depend much on the rupiah exchange rate, he said.<\/p>\n
\"Therefore, if the rupiah's value reaches Rp 8,250 per U.S.
\ndollar in August, the LPG price will be raised by Rp 50 per
\nkilogram from its current price. But if the rupiah strengthens to
\nRp 8,000, then we don't have to hike the price,\" he explained.<\/p>\n
Asked if the volatility of the LPG price would proceed at the
\nexpense of consumers, Muchsin promised Pertamina would keep the
\nfluctuations in check.<\/p>\n
LPG is widely used by middle- to upper-income households in
\nmajor cities, and the amount of LPG marketed in Indonesia reaches
\none million metric tons per year. In Jakarta alone, there are
\nsome 200,000 households using LPG for cooking.<\/p>\n
Last year, Pertamina had again raised the price of LPG from Rp
\n28,800 to Rp 32,400 per 12-kilogram tank.<\/p>\n
Pertamina's planned move to increase the LPG price has been
\ncondemned by consumer protection activists.<\/p>\n
However, Muchsin defended the move, saying that with a higher
\nLPG price, more players would enter the market.<\/p>\n
Currently, Pertamina is the only LPG producer and provider in
\nthe country.<\/p>\n
Meanwhile, he said that oil fuel prices were expected to
\nremain stable next month at their current levels, because crude
\noil prices on the world market stood at between $26 and $27 per
\nbarrel.<\/p>\n
\"If the exchange rate for the U.S. dollar remains stable next
\nmonth, the domestic fuel prices are likely to stay the same,\" he
\nsaid.<\/p>\n
In January, responding to nationwide protests against the
\ngovernment's decision to raise fuel prices, President Megawati
\nSoekarnoputri made only small adjustments. The price of
\nautomotive diesel was cut to Rp 1,650 per liter from the previous
\nprice of Rp 1,890 per liter, while the price of industrial diesel
\nwas reduced to Rp 1,650 from Rp 1,860. The price of heavily
\nsubsidized kerosene for industrial use was lowered slightly to Rp
\n1,800 from Rp 1,970.<\/p>\n
The prices of other fuel products, including premium gasoline
\nand kerosene for household needs, were maintained.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pertamina-to-float-price-of-lpg-to-avoid-losses-1447893297",
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"sponsor": "Okusi Associates",
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