Energy Minister Sets LPG Benchmark Price Formula for 2020

MINISTRY OF ENERGY AND MINERAL RESOURCES

PRESS RELEASE

NUMBER: 024.Pers/04/SJI/2021

Date: 17 January 2021

Energy Minister Sets LPG Benchmark Price Formula for 2020

Minister of Energy and Mineral Resources (EMR) Arifin Tasrif has decided the benchmark price for Liquefied Petroleum Gas (LPG) in 3-kilogram (Kg) cylinders for 2020. The decision is set out in Decision of Minister of EMR Number 253.K/12/MEM/2020 on the Benchmark Price for 3-Kilogram Cylinder Liquefied Petroleum Gas.

Dictum one of the Ministerial Decision reads that the benchmark price has been set according to the Market Index Price (HIP) of 3-kg cylinder LPG applicable in the month plus distribution cost (including handling) and margin.

"The Benchmark Price of 3-kg Cylinder LPG as set out in dictum one is set under the formula of 103.85% (one hundred and three point eight five percent) of the HIP of 3-kg cylinder LPG + US$ 50.11/MT (fifty point eleven United States dollars per metric ton) + Rp 1,879.00/kg (one thousand eight hundred and seventy nine rupiah per kilogram)," reads dictum two.

The benchmark price formula can be evaluated anytime depending on the realization of factors affecting the supply and distribution of 3-kg Cylinder Liquefied Petroleum Gas.

Dictum three states that the Benchmark Price Formula for 3-kg Cylinder LPG as intended in dictum two is used as the calculation basis for the benchmark price amount for every kilogram of Liquefied Petroleum Gas in 3-Kilogram Cylinders.

The decision on the benchmark price itself has taken into account the letter of Minister of Finance Number S-1049/MK.02/2020 of November 12, 2020 on Consideration for the Proposal for Benchmark Price Formula of 3-Kg Cylinder LPG.

Additionally, the ministerial decision implements the provisions of Article 7 of Presidential Regulation Number 104 of 2007 on the Supply, Distribution, and Pricing of 3-Kilogram Cylinder Liquefied Petroleum Gas and Article 7 of Presidential Regulation Number 38 of 2019 on the Supply, Distribution, and Pricing of Liquefied Petroleum Gas for the Fishing Vessels of Target Fishermen and the Water Pumps of Target Farmers.

The ministerial decision becomes effective from its stipulation date and will be applied retrospectively from January 1, 2020. The decision was stipulated on December 22, 2020.

For the record, the decision on the benchmark price does not affect the retail price ceiling (HET) or the sales price of 3-kg cylinder LPG to consumers. The ministerial decision affects government payment to business entity (Pertamina) only, especially because the government has committed itself to provide energy access at affordable prices through the distribution of LPG converter kits to fishermen and farmers. (IY)

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