Pertamina Raises Price of LPG for Industrial Sector

State oil and gas firm PT Pertamina has raised the price of liquefied petroleum gas (LPG) for industrial consumers effective as of Jan. 7, the second increase in less than five months. The last price increase was on Sept. 1 last year. Pertamina has raised the price of its LPG products sold in 50-kilogram tanks and bulk packages (equal to 5,000 kgs) for business consumers by 35.5 percent and 25.2 percent per kilogram, respectively.

This means the price of a 50-kg LPG tank has increased to Rp 7,932.33 (85 U.S. cents) per kg, while the LPG sold in bulk carriers has risen to Rp 7,329.74 per kg from the previous price of Rp 5,852 per kg. "We need to increase the price due to a significant rise in the price of commodities in global markets," the Pertamina website said.

It cited the international benchmark for LPG prices as issued by Aramco, which showed LPG prices in 2007 had risen by 19.29 percent to $611.7 per metric ton from $512.8 per metric ton. Last September, the price increase averaged 46 percent. Pertamina deputy director for marketing and trading Hanung Budya said at that time the increase was made in order to help the company boost the performance of its LPG business division.

Pertamina's LPG business suffers some Rp 2 trillion in losses each year. Currently, the retail market price of LPG stands at above Rp 10,000 per kg. The 50-kg LPG tanks and LPG bulk products are mainly consumed by the industrial sector, including restaurants, hotels and hospitals.

On its website, Pertamina stated it would keep the price of its 12-kg LPG tanks sold to households at the current level of Rp 4,250 per kg