JAKARTA, Jan 6 (Reuters) – Indonesia’s Industry Ministry will put forward a plan for mandatory domestic gas sales to ensure local manufacturers can get cheap supplies after they complained of high prices, Industry Minister Agus Gumiwang Kartasasmita said on Monday.
The so-called domestic market obligation (DMO) would require gas producers to sell a portion of their output to local buyers at a set price, making sure local gas distributors have sufficient supplies to keep gas utility tariffs low.
The ministry will put the plan to President Joko Widodo on Monday, arguing that it will help state-controlled gas utility company PT Perusahaan Gas Negara sell gas to industries at a lower price, Kartasasmita told reporters.
“We will formulate how big the DMO will be and at what price level, but the point is gas supplied to factories should be priced below $6 per million British thermal unit (mmbtu) if possible,” he said.
Natural gas is currently sold to manufacturers at around $8-$9 per mmbtu, he said.
Indonesia in late 2016 issued a regulation that ordered energy companies to cut natural gas prices to $6 mmbtu for fertilizer, steel and petrochemical industries, however companies complained last year that the rules have not been fully implemented. (reut.rs/2ZY1Xlk)
The ministry is also considering a plan that would lower the government’s portion of gas producing contracts and allow industries to import gas if there were no gas utilities near their factories, Kartasasmita said. (Reporting by Bernadette Christina Munthe; Writing by Fransiska Nangoy; editing by Richard Pullin)
