SKK Migas welcomes presidential regulation on gas prices

Jakarta (ANTARA News) - The Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) has welcomed the signing of Presidential Regulation No.40/2016 on Natural Gas Pricing.

SKK Migas Deputy Chairman Zikrullah said on Thursday that the new regulation is expected to increase downstream gas consumption as the new ruling contains price adjustments.

"I heard that the Presidential Regulation (Perpres) on gas pricing has been issued. This means that downstream gas consumption will increase as there will be a price adjustment," Zikrullah said.

The Perpres, which lowers gas price and is retroactive from January 1, 2016 regulates that the government cuts prices of gas in seven sectors of industries to accelerate economic growth and increase the competitive edge of national industry.

The seven industrial sectors, which will benefit from the lowering of gas prices, are the fertilizer industry, petrochemicals, oleo chemicals, steel, ceramics, glass and rubber gloves.

However, it did not mention the power generation sector, which also enjoys a gas price cut.

Based on the Perpres signed by President Joko Widodo (Jokowi) on May 3, the lowering of gas prices was implemented by reducing the portion that belongs to the state. The portion that belongs to the product-sharing contractor companies (KKKS) will not be reduced.

The new regulation states that the gas price will be decided by considering the economic viability in the field, the price in the global and domestic markets, the purchasing power of consumers at home and the added value of gas utilization.(*)