Govt, Private Businesses to Build City Gas Networks

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 296.Pers/04/SJI/2020

Date: 8 October 2020

Govt, Private Businesses to Build City Gas Networks

Ministry of Energy and Mineral Resources (EMR) plans to apply the Government and Private Business Cooperation (KPBU) in meeting the target of building 4 million Household Connections (SR) of city gas networks. The scheme is expected to form a solution to dependency on the State Budget and curb LPG imports.

"Our energy security will be in trouble if we depend too much on import because most of our LPG is imported while 3-kg LPG subsidized. We have to make energy diversification, for example through this KPBU scheme," said Advisor to Minister of EMR for Strategic Planning, Yudho Dwinanda Priaadi, in Public Consultation on the Development of City Gas Networks under the KPBU Scheme which was held in Batam City on Tuesday (6/10).

Directur of Oil and Gas Infrastructure Planning and Development, Alimuddin Baso, explained that data from the Central Government Financial Reports (LKPP) showed LPG subsidy was on the increase. In 2016, LPG subsidy amounted to Rp24.94 trillion. In 2017, it went up to Rp38.76 trillion, Rp58.14 trillion (2018), and Rp54.15 trillion (2019).

"A huge amount has been spent on LPG subsidy. So, one of our options is to make transformation, particularly by accelerating the development of city gas networks," Mr. Baso added.

This plan has been supported by regional governments, the Batam Municipality among others. They proposed city gas networks development involving the property sector, particularly property developers.

"As the downstream consumers or users, we enthusiastically welcome this program. In fact, we invited sub-regency and village heads to this event so that they too will support this plan. It's obvious that natural gas is easy and ready to use, safe, and economical," said Syamsul Bahrum, Acting Mayor of Batam, on the occasion.

The development of city gas networks in Batam, continued Mr. Bahrum, is well-suited because the city is well-known not only for its industrial parks but also residential areas. He even proposed the issuance of regulation requiring property developers to build city gas networks.

"If needed, we'll issue a regulation requiring a certain portion of residential areas to be developed to have gas networks. It will serve as a promotional product for them, too," he said.

To prevent patchy development, Mr. Bahrum proposed mapping of residential areas currently being developed and those to be developed. After the mapping is compete, the next job is to persuade people into installing gas connection at their homes.

According to a temporary study, the potential for city gas installation in Batam reaches 307,749 SRs with a total cost estimate of Rp 2.37 trillion, or equal to Rp 7.72 million per house connection.

City gas networks are built in areas with or near gas sources. In Batam, a total of 4,001 SRs have been built with the State Budget funds and 795 SRs with PT PGN's.

The consultation was held under strict health protocol and attended virtually by Advisor to Minister of EMR for Strategic Planning Yudho Dwinanda Priaadi and Director of Oil and Gas Infrastructure Planning and Development Alimuddin Baso as well as resource people from Bappenas and Ministry of Finance. (IY)

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