PGN Press Profits for Government Support

By : Herry Barus And Aldo Bella Putra | Wednesday, March 28 2018 - 17:30 IWST

Perusahaan Gas Negara (PGN)
Perusahaan Gas Negara (PGN) - Jakarta - Limited Liability Company of Perusahaan Gas Negara (PGN) claims willingly pressing the company's profit to support government programs.

PGN Corporate Secretary Rachmat Hutama said in a press release in Jakarta on Wednesday (28/3/2018) that as a SOE, it is the company's duty to support government policy in providing affordable domestic gas price for industry and society.

For example, PGN does not raise the cost of goods sold (HPP) of gas to customers even though domestic gas purchase price from contractor of cooperation contract (KKKS) keeps increasing.

Previously, the House of Representatives highlighted the decline in PGN's profit in the last 5 years from 845 million US dollars in 2013 to 143 million dollars in 2017.

According to Rachmat, domestic gas purchase price has increased by an average of 8 percent in 2013 to 2017 ranging from 1.58 US dollars to 2.17 dollars per MMBTU.

The gas purchase cost is the largest share in the formation of the selling price of natural gas, about 60 percent of its contribution. However, rising domestic gas purchase price from producers or KKKS was not followed by adjustment of gas selling price to customers, he said.

He cited the soaring gas purchase price in accordance with the regulator's instruction is from ConocoPhilips to meet the needs of the industry in Batam from the original 2.6 US dollars per MMBTU to 3.5 dollars per MMBTU.

PGN, he added, continues to buy ConocoPhillips gas despite having to bear the burden of 7.5 million US dollars per year.

PGN last time adjusted the selling price of natural gas to customers in 2012 until 2013.

Rachmat added that the management did not increase the selling price of gas to customers in order to support the government policy in accordance with Presidential Regulation No. 40 of 2016 on the Determination of Natural Gas Price.

The Beleid ordered the Energy and Mineral Resources Minister to ban gas distributor from selling gas at a price of more than six US dollars per MMBTU for six industrial sectors using gas such as fertilizers, petrochemicals, oleochemicals, steel, ceramics, glass and rubber gloves.

PGN supports the Ministry of Energy and Mineral Resources' instruction to reduce the selling price of gas to industrial customers in Medan, North Sumatra, in accordance with Minister of Energy and Mineral Resources Decree No. 434.K / 2017.

The regulation, according to him, asks PGN to lower the gas selling price from US $ 1.35 per MMBTU to 0.9 dollars per MMBTU, enabling the company to bear the burden of three million dollars per year.

In addition, Rachmat said that the assignment of the ESDM Ministry to build gas filling stations (SPBG) and gas network (jargas) of households also requires PGN to provide funds at least 4.9 million dollars per year.

"We also provide price incentives to PT PLN (Persero) because the government wants to lower the cost of production (BPP) of PLN electricity so that the price of electricity to the public does not rise, we run it as a form of state-owned synergy desired by the government," he said.

Nevertheless, Rachmat ensures PGN's management has made every effort to prevent the company's profits from falling deeper.

This, according to him, is done by reducing operational costs to 457 million dollars by the end of 2017 from 511 million dollars in 2013.

Management also reduces the amount of short-term debt and liabilities of the company.

By the end of 2017, he said, PGN's liabilities were recorded at 3.1 billion dollars or significantly reduced compared to the position of 2016 liabilities of 3.66 billion US dollars.

"We continue to make various efficiency efforts so as to remain profitable in the midst of current economic conditions," said Rachmat.

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