Government increases gas price by 20 percent

JAKARTA (JP): Minister of Mines and Energy I.B. Sudjana has issued a decree to raise the price of gas by 20 percent to Rp 385 (10 U.S. cents) and Rp 400 per cubic meter for industries and other institutional buyers.

The head of the marketing division of the state-owned gas distributor Perusahaan Gas Negara (PGN), Hari Pratoyo, said the new price was effective as of Nov. 1.

"But the old price still will be applied for the sale of gas to households," Hari said Tuesday at a workshop on PGN's profile organized by the company and the Jakarta branch of the Association of Indonesian Journalists.

He said the price of Rp 385 per cubic meter is being applied to industrial and commercial customers consuming between 1,000 cubic meters and 300,000 cubic meters per month, while the tariff of Rp 385 per cubic meter is for those using between 300,000 cubic meters and 5 million cubic meters.

The new prices are only being applied to customers in Jakarta, Medan, Surabaya and Bogor, while customers in Cirebon and West Java are still able to pay under the old tariff.

"Customers in Cirebon are excluded from the new prices because they are mostly smaller industries. We are afraid they will switch to other fuels if they pay a higher tariff," said Hari.

Industrial and commercial customers account for only 4 percent of the company's 32,628 customers, but they consume 97 percent of the total 163.22 million cubic meters of gas sold by the company each month.

The company has 505 industrial customers, 886 commercial costumers, and 31,237 household customers, as of last September.

He said the company raised the tariff to compensate for the rising costs stemming from the sharp depreciation of the rupiah against the U.S dollar.

Hari said the rupiah's depreciation against the dollar had affected the company since 65 percent of the gas it bought from the state-owned oil and gas company Pertamina was in dollars, while the other 35 percent was in rupiah.

According to Hari, PGN has to pay 65 percent of the gas in dollars because Pertamina bought it from its joint operation contractors in dollars, while Pertamina was willing to sell the other 35 percent of the gas in rupiah, because that amount was produced by Pertamina.

The head of PGN's business and information assessment office, Arsyad Rangkuti, said on the same occasion that despite the current monetary crisis, PGN projected to increase its profit by 28.7 percent to Rp 103 billion by the end of this year, while its revenue would rise by 32 percent to Rp 623 billion.

Its assets were projected to increase by 68 percent to Rp 1.1 trillion by the end of the year.

"The monetary crisis only has made PGN lose some potential profit. Had the monetary crisis not happened, PGN would have earned a much higher profit this year," Arsyad said.

PGN currently has 1.73 million kilometers in its gas distribution network throughout the country as of last September, up from 1.6 million kilometers last year.

According to Arsyad, PGN was scored by the Development and Finance Control Board (BPKP) as a very healthy company from 1992 to 1995 and a healthy company in 1996. (jsk)