How come Gas Prices in Indonesia Are High?

Economist Emil Salim explained that natural gas in Indonesia has a high price disparity. That is because of the long chain distribution process.

Emil explained that currently the price of natural gas in Indonesia reaches US $ 14.5 per mmbtu. This figure is far higher than the price set by the government of US $ 6 per mmbtu.

“There is a gas purchase factory up to US $ 14.5 per mmbtu. Even though the president has set the price of US $ 6 per mmbtu,” he explained in a public discussion in Aryaduta Jakarta, Tuesday (01/15/2019).

Furthermore, Emil said, currently the gas distribution network in Indonesia is still from the East. In fact, the gas is used in the West.

So, inevitably high distribution costs are needed to deliver gas from the East to the West.

“The location of the source puts the distribution into a problem. The number is in the East (source) but needs industry in the West,” he said.

For this reason, he advised the government to build an integrated natural gas pipeline. He hopes that gas prices will go down along with adequate infrastructure.

“Because the source is in the East, infrastructure is limited, proven reserve limits, high costs, use in the West. So, infrastructure development becomes important if we want to turn on the natural gas industry,” he concluded. (ang/ang)

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