"There is no problem if the proposal is not accepted."
Jakarta (ANTARA News) - State-owned Enterprises (SOE) minister Dahlan Iskan said he accepted the government decision to reject a proposal to raise the price of gas in 12-kg gas cylinders.

"The present condition requires state-owned oil and gas firm Pertamina to propose a price hike but it is up to the government to decide. What is important is that Pertamina has submitted a price hike proposal," the minister said here on Monday.

Dahlan said that Pertamina had proposed to increase the price of non-subsidized liquefied petroleum gas (LPG) in 12-kg cylinders in an effort to reduce business cost. The business cost is predicted to reach Rp5 trillion in 2013.

Pertamina has initially planned to raise the LPG price in March 2013 with a proposed price increase of 36.2 percent from Rp5,858 to Rp7,966.7 per kg for LPG in 12-kg cylinders.

But the proposal to raise the price was postponed until unspecified time. Dahlan said that Pertamina and the SOE ministry had proposed the price to prevent the company from suffering losses.

"There is no problem if the proposal is not accepted. The important thing is that we have proposed it. So, the State Audit Board (BPK) will not blame us if the company suffers a loss," Minister Dahlan said.

Earlier, Chief Economic Minister Hatta Rajasa said the government had considered the purchasing power of the people in deciding to postpone the increase in the 12-kg LPG cylinder.

This is because the government will also raise the electricity tariff price in 2014.

He said now is not the right time to raise the price of LPG in 12-kg cylinders.

Pertamina has the authority to raise the price of non-subsidized LPG in 12-kg cylinders. However, the government must give its views to the plan, he said.

The company has proposed a 36.2 percent rise in the price of LPG in 12-kg cylinders effective in March 2013 to the government.

If approved, the price of LPG in 12-kg cylinders will increase by Rp2,116.7 to Rp7,966.7 from Rp5,850 a kg previously.

As such, the price of LPG in 12-kg cylinder from agents to consumers will increase by Rp25,400 to Rp95,600 from Rp70,200 earlier.

The price hike is expected to reduce the company`s losses from the sale of LPG in 12-kg cylinders by Rp1.1 trillion to Rp3.9 trillion.

Pertamina last raised the price of LPG in 12-kg cylinders by Rp100 to Rp5,850 from Rp5,750 a kg in October 2009.

However, the production cost of LPG continues to increase to up to Rp10,064 a kg now from Rp7,000 a kg in 2009.

With the production cost of LPG reaching Rp10,064 a kg and the selling price of LPG to agents standing at Rp4,912 a kg, Pertamina must spend Rp5,152 on every kilogram of LPG.
(Uu.A014/B003)

Editor: Priyambodo RH
Copyright © ANTARA 2013