Industry Actors Want Formulation of Gas Price Based on Products

By : Hariyanto And Aldo Bella Putra | Wednesday, September 27 2017 - 21:30 IWST

Menteri Perindustrian Airlangga Hartarto dan Menteri ESDM Ignasius Jonan
Menteri Perindustrian Airlangga Hartarto dan Menteri ESDM Ignasius Jonan - Jakarta - The Minister of Industry, Airlangga Hartarto, said industry players want the calculation of gas prices for industries to be based on products produced, no longer based on fixed prices. This formulation is expected to spur local gas absorption, such as from the Masela Block, Maluku and Bintuni Bay, West Papua.

"We also want the formulation to be product-based, not fixed. Now there is little change in price formulation. So, if the price formulation has not been met, investors cannot walk," said Minister of Industry at the opening of Seminar on Mining and Energy Expo 2017 in Jakarta, Tuesday (26/09/2017).

Menperin pointed out, in the development of petrochemical industry projects in Masela, investors expect Masela gas base price is set at about US $ 3 per mmbtu in plant gate. Meanwhile, the Ministry of Energy and Mineral Resources estimates that Masela gas prices are the lowest at US $ 5.86 per mmbtu.

However, Airlangga said it had submitted the proposal to the ESDM Ministry some time ago. This request has been responded by the Ministry of Energy and Mineral Resources, which will review the formulation of gas prices expected by industry players.

According to him, if the gas price can be reduced to US $ 3 per mmbtu, there are some industries that are interested. They are PT Pupuk Indonesia, Elsoro Multi Prima, and Kaltim Metanol Industri / Sojitz. The plan of the three industries will absorb the government's supply of 474 mmscfd.

Minister of Industry conveyed that his parties prioritize the acceleration of petrochemical industry development in the country. This strategic sector plays an important role as a raw material supplier for many downstream manufactures such as plastic, textile, paint, cosmetics and pharmaceuticals industries.

With competitive gas prices, the competitiveness of the national petrochemical industry will increase. "The petrochemical industry is one sector that uses natural gas as its raw material, by producing products such as methane, methanol, and ammonia as well as other derivative products. We are focusing on pushing the industry downstream from these sectors " Airlangga said.

Previously, Director General of Chemical, Textile and Multifarious Industries (IKTA), Achmad Sigit Dwiwahjono, said that the government facilitates the provision of facilities and incentives for investors who want to establish petrochemical industry.

For example, fiscal incentives include tax allowances and tax holiday with certain requirements for specific industries. In addition, it is being proposed special incentives in the form of tax exemption for 20 years. The policies that can be utilized by investors in Bintuni and Masela are still being discussed at the Coordinating Ministry of Economic Affairs meeting.

Sigit added that the capacity of the petrochemical industry has been increasing since 2010 with an average of 0.845 million tons per annum (MTPA). Total capacity in 2016 reached 33,727 MT. "Currently, the petrokomia industry in Indonesia is capable of producing 42 types of products, with main products urea, ammonia, ethylene and propylene," he said.

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