Industries Reject Increase in Gas Prices

By webadmin on 02:10 pm Jun 08, 2012
Category Archive

Damiana Ningsih Simanjuntak

An association of 13 industrial groups has aired their rejection of a sudden 55 percent gas price increase planned by state-owned Perusahaan Gas Negara (PGN), an industry executive said on Friday.

The Intra Industry Association Forum said the raise will cause companies to suffer losses because they were generally bound by long-term contracts with buyers and could not revise their contracts at will.

“Gas costs affect about 15 to 20 percent of production costs. A 55 percent rise will really burden the performance of companies because it will only swell their production costs,” Sofjan Wanandi, the chairman of the Indonesian Employers Association (Apindo) said in a press conference.

He said a gradual increase could still be managed by industries but not a sudden substantial raise.

“We would agree on a gradual rise, but only if toll fees are not raised because they are a component of distribution costs,” Sofjan said.

Franky Sibarani, the secretary general of the Indonesian Food and Beverage Association (Gapmmi) said the gas price increase would really burden the food and drink industry, especially in the absence of cheaper energy alternatives.

“For the food and drink industry, this is becoming a dilemma. If we have to switch to other energy sources it will not be easy. Using coal or gasoline is difficult because they need supply pipes and we need more investment. Liquid gas is much too expensive,” Franky said.

Sofjan said he is sending a letter to President Susilo Bambang Yudhoyono to try to overcome the problem.

“PGN should not only be profit oriented, for the sake of high dividends, we are placed at a disadvantage. It will kill industries that provide a lot of jobs. We demand that this problem be resolved urgently,” Sofjan said.

Investor Daily