PLN sets gas aside for industries
Leony Aurora and Rendi A. Witular, The Jakarta Post, Jakarta
State power firm PLN will reallocate 10 million standard cubic feet of natural gas per day (mmscfd), normally supplied to state gas distributor PT Perusahaan Gas Negara (PGN), for industries for one year, a minister says.
The natural gas will be temporarily replaced by petroleum, which state oil and gas firm Pertamina has agreed to supply, Minister of Industry Andung A. Nitimihardja said at the presidential palace on Wednesday.
"PGN will compensate for the additional costs incurred by (PLN) using petroleum instead of gas from its income," said Andung, adding that the formula for the compensation was being discussed.
"If after a year the gas supply is still insufficient, we will ask (PLN) for more," he said.
Separately, PGN president director WMP Simanjuntak announced after a meeting with PLN and the Ministry of Energy and Mineral Resources that the gas redistribution would begin in mid-August.
Simanjuntak said that PGN was expecting to get additional supply from the Lapindo Brantas and Rancak fields, operated by EMP Kangean -- a subsidiary of the country's second largest private oil company, Energi Mega Persada -- amounting to 20 mmscfd in total.
"We expect the additional gas to start flowing before the end of this year," he said.
Meanwhile, PLN director of power plants and primary energy generation Ali Herman Ibrahim said that the electricity firm would suffer losses due to the gas reallocation.
However, the energy ministry's Director General of Electricity and Energy Yogo Pratomo said that in addition to receiving compensation, PLN would only spend as much on petroleum as it would have on gas.
"If (the petroleum) needs to be subsidized, it will. PLN won't be disadvantaged by the (gas) reallocation," he said.
PLN has said that it needs 11.44 million kiloliters (kl) of petroleum to generate power this year, far more than the 8.35 million kl of subsidized petroleum determined by Pertamina.
The power firm has struggled to reduce petroleum usage as Pertamina has said that PLN may have to pay market prices for the additional supply.
Declining gas supply from Lapindo Brantas and EMP Kangean for PGN customers in East Java, as well as Kodeco's less than expected supply, has reduced the amount of gas available to industries to only 73 mmscfd from the about 120 mmscfd needed.
PGN started to apply a quota-system on larger industries in East Java in July, reviewing the allocation monthly. PGN will stop gas flow to a company if it exceeds its quota.
A number of industry players, particularly ceramic manufacturers, fear that the new quota system will further hamper the ailing industry.
For August, as fertilizer plant Petrokimia Gresik undergoes maintenance and reallocates 25 mmscfd of its supply for PGN's use, the state gas distributor has set the quota at 85 percent of the contracted amount.
PGN expects to resolve the gas shortage in East Java in July next year, when Santos will start supplying 100 mmscfd of natural gas from its field in the province.