Indonesia Earmarks $436m for More Natural Gas Stations

13 January, 2012 | Source: Jakata globe

Serpong/Bandung. The government plans to make gas fuel available at 110 new gas stations in Java this year at an estimated cost of Rp 4 trillion ($436 million), in a bid to encourage private car users to convert their fuel to natural gas.

“The government is serious about developing gas fuel transportation,” said Widjajono Partowidagdo, the deputy energy and mineral resources minister, adding that 19 of the new stations will be built in Jakarta starting in April.

“At first we expect [state oil and gas firm] Pertamina to carry out these projects, but later I hope that private gas pump operators will also participate,” he said.

The government is trying to encourage drivers to fuel their cars with natural gas after it announced a plan to prohibit private car owners from using Premium fuel, the widely used, low-octane fuel that receives state subsidies. Alternative fuels include higher octane gasolines Pertamax and Pertamax Plus, which are more expensive and not subsidized.

The Premium prohibition will begin on April 1 in Java and Bali, though public transport vehicles and motorcycles will be exempt.

The regulation will also go into effect in Sumatra and Kalimantan in the second half of 2013, Sulawesi in the first half of 2014, and Maluku and Papua in the latter half of that year.

The government has quickly increased the availability of non-subsidized fuel in the past year. In March 2011, only 35 percent of the nation’s 4,667 gas stations were equipped to sell Pertamax, but now the government claims that 80 percent of them are ready to sell the non-subsidized fuel.

Jero Wacik, the energy and mineral resources minister, said the government has also provided 250,000 converter kits that can shift fuel use from gasoline to processed natural gas, including liquefied gas for vehicles (LGV) or compressed natural gas (CNG).

Even so, critics say Indonesia lacks enough gas fuel stations.

CNG is only sold at 10 fuel pumps nationwide: six in Jakarta and the rest in Palembang, South Sumatra, and Surabaya, East Java. It costs about Rp 40 billion to build a new CNG station.

Widjajono said the estimated cost of building LGV stations was much lower, at about Rp 1.5 billion per station, because unlike CNG stations, they can be attached to existing petroleum gas stations.

Currently, Premium fuel is sold at Rp 4,500 per liter, while the price for Pertamax and Pertamax Plus fluctuates at around Rp 8,000 to Rp 9,000. In contrast, Jero said, LGV will sell at Rp 5,600 per liter of oil equivalent and CNG will sell at Rp 3,100 per liter.

“I still can’t predict the impact of the prohibition [on private cars using Premium], but most likely it will hurt middle-income car users,” said Sudirman Maman Rusdi, the chairman of the Indonesia Automotive Industries Association (Gaikindo).

A lack of infrastructure, he added, will pose a problem for the fuel conversion program, as will the price of converters, which will cost from Rp 11 million to Rp 14 million per unit according to Jero’s estimates.

“That will deter people’s desire to convert,” said Sudirman, who is also the president director of Astra Daihatsu Motor, the local distributor for Japan’s Daihatsu cars..

Dahlan Iskan, the state enterprises minister, said he could not guarantee that the government would subsidize the cost of the converters.

However, he met with state firms in strategic industries on Thursday to examine whether they might also be able to produce converter kits, in addition to the 1 million converters that the government plans to produce.

State aircraft maker Dirgantara Indonesia, train equipment maker Industri Kereta Api, telecommunication equipment maker Industri Telekomunikasi Indonesia, and military equipment and explosive maker Pindad are expected to join the program.

Additional reporting by Antara


 

 

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