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Ada Pertanyaan? Hubungi Kami Marcell Sihombing, Kartini L. Makmur
Indonesia’s natural-gas sector is yet to witness any effective reform as regards the enhancement its global competitiveness. As such, many stakeholders are in a state of high anticipation concerning the upcoming Presidential Regulation on Natural Gas Management (Upcoming Regulation), which will repeal and replace Minister of Energy and Mineral Resource Regulation No. 19 of 2009 on Pipeline Natural-Gas Businesses (2009 Regulation).
The 2009 Regulation is considered to be hampering the development of gas distribution facilities throughout Indonesia, while in contrast, the Upcoming Regulation is expected to boost the development of pipelines across the country, as well as to stabilize gas prices.
Mamit Setiawan, Executive Director of Energy Watch, recently stated his firm belief that the implementation of an open-access scheme, as mandated by the 2009 Regulation, was the main cause of the current slowdown in the construction of a natural-gas distribution network, as well as being responsible for the skyrocketing price of gas. Setiawan’s observations have led him to conclude that since 2013, the growth-rate in natural-gas distribution pipelines has been extremely low, as companies not currently in possession of a distribution network appear to be reluctant to build any new ones. This slowdown has been compounded by various illegal cartel practices.
Mr. Setiawan further stated that he expects the Upcoming Regulation to bring about positive developments across the industry. He also reminded the government to be resolute in its removal of gas quotas for companies that have not yet built, or which do not own, their own gas-distribution networks, as such a quota imposition is the main reason why industrial gas prices have spiked beyond governmental control.
“If we refer to the prevailing laws and regulations, however, any determination of the price of natural gas should be based on agreements made between producers and consumers, and this has been officially acknowledged by the government,” asserted Mr. Setiawan.
Mr. Setiawan also emphasized that the removal of the imposition of gas quotas on companies that have not built, or that do not own, their own distribution networks, as hopefully laid out in the Upcoming Regulation, will greatly benefit consumers across the country. This positive effect should take the form of lower gas prices for consumers.
Another important matter that must be addressed by the Upcoming Regulation involves the so-called “toll-free” policy. According to Mr. Setiawan’s analysis, the government must have the courage to significantly reduce its profit allocation on each gas well, in order to minimize the price of industrial gas.
“The current level of government-profit allocation, which is set at around 70 percent, needs to be reduced. This reduction, however, should not be made with the intention of increasing the contractors’ profits, but should instead simply reduce the proportion of the profit margin received by government from the sale of gas for industrial purposes,” said Mr. Setiawan.
In addition to the above factors, Mr. Setiawan also believes that the Upcoming Regulation should formulate a national-gas allocation priority scale different to that laid out in Minister of Energy and Natural Resources Regulation No. 3 of 2010 on the Allocation and Utilization of Natural Gas for Domestic Purposes (2010 Regulation).
The provision of Article 6 of the 2010 Regulation that places general industries in last place after gas-lifting necessities, fertilizer industries, and electricity procurement, needs to be modified according to Mr. Setiawan, who asserts that the government should set up a brand-new national gas-priority scale in order to support the development of the country’s domestic-gas industries.
Irwan Andri Atmanto, Head of Corporate Communications for the National Gas Company [PT Perusahaan Gas Negara (Persero) Tbk. – PGN] is in agreement and also admits that expanding natural-gas utilization by industries and consumers will not be achievable without the further development of natural-gas infrastructure.
For this reason, Mr. Atmanto emphasizes that the construction of gas infrastructure must be completed before gas-based industries begin operating at any given location. According to Atmanto’s calculations, the necessary infrastructure should have been completed approximately four to five years before any gas industry commences operations.
“If pipeline construction only gets underway at the same time as an industry commences its operations, then high gas prices will remain an issue, and the distribution process will not be conducted efficiently either,” asserted Mr. Atmanto.
In light of this analysis, gas infrastructure projects should always be planned on a long-term basis, according to Mr. Atmanto, and should always acknowledge that any profits and returns on investment take plenty of time to mature. Unfortunately, companies tend to adopt a “wait and see” policy when it comes to the construction of infrastructure in any given industrial location or zone. For example, a company may wish to construct a factory in a location where the energy supply is practically non-existent, as the sufficient gas infrastructure has yet to be built.
“PGN is going to have to be bolder in its building of pipeline networks in locations that have been designated as industrial zones,” concluded Mr. Atmanto.
(sp)
Marcell Sihombing, Kartini L. Makmur
Indonesia’s natural-gas sector is yet to witness any effective reform as regards the enhancement its global competitiveness. As such, many stakeholders are in a state of high anticipation concerning the upcoming Presidential Regulation on Natural Gas Management (Upcoming Regulation), which will repeal and replace Minister of Energy and Mineral Resource Regulation No. 19 of 2009 on Pipeline Natural-Gas Businesses (2009 Regulation).
The 2009 Regulation is considered to be hampering the development of gas distribution facilities throughout Indonesia, while in contrast, the Upcoming Regulation is expected to boost the development of pipelines across the country, as well as to stabilize gas prices.
Mamit Setiawan, Executive Director of Energy Watch, recently stated his firm belief that the implementation of an open-access scheme, as mandated by the 2009 Regulation, was the main cause of the current slowdown in the construction of a natural-gas distribution network, as well as being responsible for the skyrocketing price of gas. Setiawan’s observations have led him to conclude that since 2013, the growth-rate in natural-gas distribution pipelines has been extremely low, as companies not currently in possession of a distribution network appear to be reluctant to build any new ones. This slowdown has been compounded by various illegal cartel practices.
Mr. Setiawan further stated that he expects the Upcoming Regulation to bring about positive developments across the industry. He also reminded the government to be resolute in its removal of gas quotas for companies that have not yet built, or which do not own, their own gas-distribution networks, as such a quota imposition is the main reason why industrial gas prices have spiked beyond governmental control.
“If we refer to the prevailing laws and regulations, however, any determination of the price of natural gas should be based on agreements made between producers and consumers, and this has been officially acknowledged by the government,” asserted Mr. Setiawan.
Mr. Setiawan also emphasized that the removal of the imposition of gas quotas on companies that have not built, or that do not own, their own distribution networks, as hopefully laid out in the Upcoming Regulation, will greatly benefit consumers across the country. This positive effect should take the form of lower gas prices for consumers.
Another important matter that must be addressed by the Upcoming Regulation involves the so-called “toll-free” policy. According to Mr. Setiawan’s analysis, the government must have the courage to significantly reduce its profit allocation on each gas well, in order to minimize the price of industrial gas.
“The current level of government-profit allocation, which is set at around 70 percent, needs to be reduced. This reduction, however, should not be made with the intention of increasing the contractors’ profits, but should instead simply reduce the proportion of the profit margin received by government from the sale of gas for industrial purposes,” said Mr. Setiawan.
In addition to the above factors, Mr. Setiawan also believes that the Upcoming Regulation should formulate a national-gas allocation priority scale different to that laid out in Minister of Energy and Natural Resources Regulation No. 3 of 2010 on the Allocation and Utilization of Natural Gas for Domestic Purposes (2010 Regulation).
The provision of Article 6 of the 2010 Regulation that places general industries in last place after gas-lifting necessities, fertilizer industries, and electricity procurement, needs to be modified according to Mr. Setiawan, who asserts that the government should set up a brand-new national gas-priority scale in order to support the development of the country’s domestic-gas industries.
Irwan Andri Atmanto, Head of Corporate Communications for the National Gas Company [PT Perusahaan Gas Negara (Persero) Tbk. – PGN] is in agreement and also admits that expanding natural-gas utilization by industries and consumers will not be achievable without the further development of natural-gas infrastructure.
For this reason, Mr. Atmanto emphasizes that the construction of gas infrastructure must be completed before gas-based industries begin operating at any given location. According to Atmanto’s calculations, the necessary infrastructure should have been completed approximately four to five years before any gas industry commences operations.
“If pipeline construction only gets underway at the same time as an industry commences its operations, then high gas prices will remain an issue, and the distribution process will not be conducted efficiently either,” asserted Mr. Atmanto.
In light of this analysis, gas infrastructure projects should always be planned on a long-term basis, according to Mr. Atmanto, and should always acknowledge that any profits and returns on investment take plenty of time to mature. Unfortunately, companies tend to adopt a “wait and see” policy when it comes to the construction of infrastructure in any given industrial location or zone. For example, a company may wish to construct a factory in a location where the energy supply is practically non-existent, as the sufficient gas infrastructure has yet to be built.
“PGN is going to have to be bolder in its building of pipeline networks in locations that have been designated as industrial zones,” concluded Mr. Atmanto.
(sp)