Govt will restrict profit margin of gas traders

JAKARTA. Bad news for the gas traders, as Ministry of Energy and Mineral Resources (ESDM) will limit the margin portion of the traders by 5%.

This restriction will be regulated under Minister of ESDM Regulation. Director General of Oil and Natural Gas of Ministry of ESDM IGN Wiratmaja Puja said, the new regulation will stipulates the mechanism to determine the selling price of natural gas to final consumers, the formulation of calculating commercial costs and distribution tariff, as well as the incentives for the gas traders, who develop gas distribution to the regions, of which the natural gas market has not yet developed.

According to Wiratmaja, the gas traders will still enjoy the attractive benefits, despite of the some restrictions. “The government arranged fair formulation for the investors that intend to develop downstream gas infrastructure,” he said, Thursday (9/2).

Secretary General of Indonesia Natural Gas Trader Association (INGTA) Eddy Asmanto said, the government has invited INGTA to give inputs and discuss about the new regulation. However, the government seems to ignore the inputs from the businessmen.

Therefore, they objected to the gas pricing formula set by the government. "Under the current condition, we cannot operate with such constraints and the margin of 5%," Eddy told KONTAN, Thursday (9/2).

According to Eddy, the government firstly should reduce the gas’ selling price at the upstream level, on the grounds that the price component of gas at the upstream level contributes to 85%-90% of the total gas selling price. Meanwhile, the components of transmission and gas distribution costs only contribute to 10%-15% of the total selling price.

Eddy added, transmission and distribution costs cannot be shaped with the fixed price formulation, since the costs of gas distribution and transmission pipe construction in each region is various. Therefore the margin cannot be limited to only 5%. “Let alone, there are other risk factors, such as the collapsed consumers or other risks. Therefore (the margin) cannot be fixed,” Eddy said.

He reminded that many gas traders will be collapsed if the government still implements this regulation. (Muhammad Farid/Translator)