REPUBLIKA.CO.ID, JAKARTA -- The forming of a gas buffer body is called for to control price of gas for various industrial consumers, an observer said.

With the high dependence on gas for feedstock or fuel as well as the variety of types and locations of industrial consumers, the buffer is urgent, Director of Reforminer Institute Komaidi Notonegoro said here on Thursday.

"It has become urgent to form a gas price buffer for industries the like of Bulog for rice. With the buffer, gas price could be controlled easier and proportional for industrial users," Komaidi said.

Price consistency is important for the industrial consumers in planning operation and in fixing the prices of their end products, he said.

He cited urea fertilizer industry in which gas accounts for 70 percent of the basic materials, could plan production on a fixed cost and could set reasonable selling price of fertilizer for the farmers.

"I think the gas price buffer body should be formed in the near term. Fertilizers are vital in the program of food security. Fertilizers must be easily available for farmers," he said.

He said a draft law on oil and gas is being debated at the Parliament and calling for the establishment of a state company to function as a buffer agency.

The buffer company which would control gas prices must be wholly controlled and owned by the state, he said.

"It is in line with the law. The buffer agency must be wholly owned by the state like Pertamina. Companies partly owned by foreign investors are not allowed to serve as a buffer but they could provide support in line with the infrastructure they have," he said.

He said Pertamina has gas reserves upstream and has stake in LNG industry in the country and access to LNG imports giving it power to keep gas price in harmony or proportional.

"Other companies having adequate infrastructure could be involved in the system to support and strengthen the system," he added.

Nevertheless, Komaidi, did not rule out price disparity , in the far flung archipelago stretching from Sabang to Merauke, he said.

"Slight disparity is alright , but not as it is now. Now the price disparity is high ranging from US$4 to US$11 (per canister)," he said.

Muslimin Anwar, a post graduate lecturer at the University of Indonesia, said the difficulty faced by farmers in getting fertilizers is the prices being too high.

Therefore, it is urgent to form a gas price controlling body to set reasonable prices of fertilizers for farmers, Muslimin said.

The prices for industrial consumers are set proportional with their economic value, he said, adding , the prices are not the same for big and small industries, he said.

The prices are also determined by a number of factors -- the prices in the upstream sector or import prices and the mechanism of cost of services, including re-gasification for liquefied natural gas (LNG), transport (toll fee) for transmission pipes and distribution, he said.

He said the price in Malaysia , which is much smaller in territory, is not the same as in Indonesia.

In Indonesia the distances of the consuming industries from gas production centers are not the same , therefore, the prices could not be the same.

"Therefore, the buffer body to regulate gas prices is important," he said.

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