Shareholder of PT Perusahaan Listrik Negara (PLN) rejected the proposed capital expenditure worth of Rp100 trillion (US$7.14 billion) to avoid fraud at the state run power producer - Photo: Special

JAKARTA (TheInsiderStories) – After introducing its Domestic Market Obligation policy for coal on March 12, 2018, Indonesia government is going forward with its plan to introduce a DMO for gas. In near time, the Ministry of Energy and Mineral Resources (MEMR) will implement the special price of gas for DMO, said one official on Wednesday (14/11).

State-owned power producer PT Perusahaan Listrik Negara (PLN) has appealed to the government, the gas prices for DMO can be restricted at US$6.5 per million british thermal unit (MBTU) for Java and $7/MBTU for outside Java in an effort to reduce electricity prices. At present, PLN is still getting gas prices around $9 to $11 dollars per MBTU.

Based on the Government Regulation No. 79/2014 there are four primary energy for electricity generation, namely, coal, gas, hydro and geothermal. Where, PLN get specialty treatment on the primary energy.

Director General of Electricity for MEMR Andy Noorsaman Sommeng said, that the DMO was expected to take effect by the end of this year. Basically, gas prices have been defined in the MEMR Number 45 Year 2017 on Natural Gas Utilization for Power Generation.

He said, the ideal gas price for power plants should be $7 per MBTU, while the current prices ranged between $10 and $11 per MBTU.

While, the deputy minister for EMR Arcandra Tahar says his ministry is still searching for the correct formula to bring down the price of the natural gas sold to industry players to a level acceptable for buyers. But at the same time a price point that will not put producers in a disadvantageous position.

He added, one of the efforts being undertaken by the ministry is to tear down the current inefficient gas cost structure, and instead pinpoint cost areas that the government can eliminate.

PLN Get Syndicated Loans 

Yesterday, PLN received syndicated loans of Rp 4.5 trillion (US$306.12 Million) from PT Bank Rakyat Indonesia Tbk (IDX: BBRI), PT Bank Mandiri Tbk (IDX: BMRI), PT Bank Negara Indonesia Tbk (IDX: BBNI), and PT Bank Central Asia Tbk (IDX: BBCA).

According to the Finance Director Sarwono Sudarto, the funds will be used to build substations and transmissions in the Central Java region. He explained the construction of the electricity facilities to support the 35 giga-watts (GW) program.

The construction of substations and transmissions in the Central Java Region, includes the construction of a 500 kV Extra High Voltage (SUTET) Air Line in the Central Java region, up to West Java, including the construction of 150 kV High Voltage Air Channels (SUTT) in Kedung Badak-Bogor Baru , in West java.

Building of the electricity infrastructure is very important for PLN to evacuate power from plants located in Central and Eastern Java.

Sudarto explained that the development of the substation and transmission will support PLN’s efforts in providing electricity at affordable prices for the community and competitive for industry and business.

US$1: Rp14,700

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