Pertamina raises LPG price once again
A'an Suryana, The Jakarta Post, Jakarta
Defying public concern, state oil and gas company Pertamina raised again the price of liquefied petroleum gas (LPG) to Rp 32,400 (US$3.64) per tank from Rp 28,800 per tank (each tank holds 12 kilograms of LPG).
The company said that the new price would be effective as of Saturday.
It was the second increase this year, after Pertamina raised the price of LPG last July from Rp 25,200 per tank to Rp 28,800 per tank.
Pertamina, which has a monopoly over Indonesia's LPG market, said on Friday that the price hike was aimed at reducing Pertamina's losses in the LPG business here.
It pointed out that the company had been selling the commodity at a loss for quite some time because the government had already revoked its subsidy.
"The commercial price stands at Rp 3,000 per kilogram (or Rp 36,000 per tank), but we have been selling it at below cost so far," said Iqbal Hasan, Pertamina's general manager for LPG and special products at a press conference here.
He said the price hike could reduce the company's losses, which are estimated to stand at Rp 700 billion this year.
The new price applies for LPG sold in a 60 kilometer radius from the nearest Pertamina LPG station.
Transportation fees would be imposed for customers requesting LPG outside the 60 km radius.
The price hike applies for LPG used by households, while for the transportation sector, Pertamina failed to spell out whether or not there would be a price hike.
For the transportation sector, the price currently stands at Rp 1,600 per liter.
Although the public would certainly bear the burden of the price hike, Iqbal defended the policy saying that it was a normal business decision and that such decisions were common in other countries.
He said that other countries like Thailand, Malaysia, and Vietnam had imposed an even higher price for LPG sold to the public.
In the three countries, the price of LPG was Rp 4,000, Rp 3,600 and Rp 5,300 per kg respectively, well above the Indonesian price.
In a bid to appease the public, Pertamina said the company would compensate the public for the price hike with some additional services.
These included efforts to improve the quality of the LPG tanks produced by the company.
The Indonesian Consumers Foundation (YLKI) had strongly protested the previous price hike. It had even filed a class action lawsuit last July against Pertamina.
Although the court has yet to issue its final ruling on the case, Pertamina moved ahead with the second price hike.
LPG is widely used by middle to upper class households in major cities. The amount of LPG sold in Indonesia reaches one million metric tons per year. In Jakarta alone, there are some 200,000 households using LPG for cooking.