Pertamina Postpones LPG Increase

Jakarta, April 22 (Antara) - State-owned oil and gas firm Pertamina has decided to postpone its plan of increasing the price of non-subsidized liquefied petroleum gas (LPG) in 12 kg cylinders, a Pertamina spokesman said. "We have just received news that the government through the energy and mineral resources minister has asked Pertamina to postpone its plan on the change in the distribution system which will have impact on the price of 12-kg LPG," Pertamina Spokesman Ali Mundakir said in his short message Sunday night. It was planned previously that the price of non-subsidized LPG in 12 kg cylinders would be raised by about Rp12,000 and Rp20,000 which would be effective on Monday at 00.00 hours Western Indonesia Standard Time (WIB). Ali said that the increase would be made not based on content per kg as previously planned. But it would be based on the result of the change in the distribution system of the commodity. "Beginning on Monday (April 22 ), Pertamina will change the distribution system with which it will no longer bear the filling and distribution costs. The two components of cost will be borne by consumers," he said. He said that the amount of the gas price increase would be determined by the distance from the filling stations. The farther the the stations the higher cost the consumers will bear. As an example, Ali cited that previously the price 12 kg LPG at the retailer level which is some 30 km from Pertamina`s filling station in Tanjung Priok (North Jakarta), is Rp70,200 per cylinder. After it is raised, the price of 12 kg LPG in the same radius will experience an increase by Rp12,000 or increase to Rp83,500 per cylinder. He said that the change in the distribution pricing system had been implemented in the regions such as in Bangka, Lombok, Pontianak, Banjarmasin, Bitung, Kendari, Gorontalo and Maluku. The change in the distribution system will also be implemented in other regions, he said. The change will reduce Pertamina`s losses in 12kg LPG business by Rp440 billion up to December 31, 2013. Thus, the losses suffered by Pertamina from the distribution system would be reduced from the estimate of Rp5 trillion to Rp4.5 trillion in 2013. He said that the change in the distribution pricing system did not need a government approval because it constituted a corporate action. Ali said that the increase in the price of 12 kg LPG would not affect lower income people and small businesses because the government had prepared subsidized LPG in 3 kg cylinders. In March, Pertamina also postponed its plan to raise the price based on content of LPG in 12 kg because it did not won approval from the government. The current price of 12 kg LPG is expected to be raised from Rp5,850 to Rp7,966.7 per kg, or an increase by Rp2,116.7 per kg. Thus, the price of a 12 kg cylinder LPG will increase from Rp70,200 per 12 kg cylinder to Rp95,600 or an increase of Rp25,400 per cylinder.