Indonesian government officially set the gas prices for industry US$6 a millions british thermal units(MMBTU), said the energy and mineral resources (EMR) ministry on Tuesday (04/14) - Photo by PT Perusahaan Gas Negara Tbk

JAKARTA (TheInsiderStories) – Indonesian government aborted the proposal of PT Perusahaan Gas Negara Tbk (IDX: PGAS) to rise the gas prices for industrial sector, said the official today (10/30). Earlier, the state-owned producer and distributor planned to implement the new prices on Nov 1, 2019.

According to acting director general at EMR ministry, Djoko Siswanto, the rising of gas prices for this industry was not necessary. The cancelation has impacted to share of PGAS. On Thursday, the share of PGAS dropped by 13.52 percent to Rp2,210 (US$0.16) a share.

Commenting on the decision, PGAS spokesman, Rachmat Hutama, explained, the reasoned the company adjust the price caused the current price has implemented in seven years. He continued, the proposal has considered all aspects, related to natural gas trading, such as economic growth, inflation, regional minimum wage, the exchange rate, and the cost of purchasing gas.

The price adjustment was made to improve service to customers, he adds. At present, the selling price of gas for industry around US$7 – $10 per MMBTU, cheaper than Singapore, which is $12.5 – $14.5 per MMBTU.

Currently, Perusahaan Gas Negara had planned to develop distribution pipe in several cities in Indonesia to accelerate the gas sale. To finance the projects, the state-owned company prepared capital expenditure $700 million in 2020.

“We has several targets to enlarge the types of gas supply and the customers base including refineries and regular buyer through our gas network,” CEO Gigih Prakoso told the media last September.

The state-owned enterprises has a mandate from the government to deploy 78,000 household gas network in 2019. To date, the number of household gas network are reached 564,000.

Beside from internal cash, the unit of energy player, PT Pertamina, also seeks external funding to finance the expansion. Recently, he said, the company has planned to seek funds with worth of $500 million in this year.

Prakoso revealed the funds will be met by bank loan and global bond. The company has received loan from PT Bank Mandiri Tbk (IDX: BMRI) $350 million.

He states, “Global bond will become one the sources. We have a plan to issue global bond but we can’t disclose the time and value.”

The commercial director, Danny Praditya, added, that the company planned to build distribution pipe from Semarang to Grissik in East Java and surrounding Dumai city in Riau province. While, its unit PT Pertagas and PT Pertagas Niaga aimed to develop oil refineries in Subang, Cilacap, and other areas.

US$1: Rp14,000

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