NAMA

: FEBRIYANTO DWI PRABOWO

NIM

: 14312373

Car makers will be required

to install gas converter

In an attempt to boost natural-gas consumption in the gas rich country, the government is
considering introducing a regulation requiring car makers to install compressed natural gas
(CNG) converter kits in all their vehicles.The energy and resources, finance, transportation and
industry ministries will make a joint statement regarding the new regulation, according to
Wiratmaja Puja, an expert staff member for the Energy and Mineral Resources Minister who
chairs the acceleration of oil-fuel to CNG conversion program.
There will be incentives [for car makers], such as exemption from the luxury goods tax, so cars
with built-in converters can be sold at competitive prices, Wiratmaja said on Thursday.
In the beginning we will prioritize public transportation and perhaps taxis. We hope that the
plan works because there are already many stations supplying natural gas but [motorists] have
not been using them, Wiratmaja said.He added that car producers supported the plan and
asked for a transition period of between 12 to 16 months. The government has been trying to
reduce the gasoline consumption partly by encouraging the people to use other sources of
energy such as CNG.
Indonesia, a former member of the Organization of Petroleum Exporting Countries (OPEC), has
seen growing demand for energy in line with economic growth. But oil production has been
declining due to aging fields, pushing the country to import a significant amount of oil, making
it vulnerable to volatility in global oil prices.

Last years subsidized fuel price hike, implemented due to high global oil prices, has increased
the prices of consumer goods in the domestic consumption-driven economy, leading to a
slowdown in economic growth.Currently, subsidized fuel prices stand at Rp 6,500 (57 US cents)
per liter for premium or low-octane gasoline and Rp 5,500 for diesel-fuel, while the price for
public transportation vehicles is set at Rp 3,100 per liter. Critics have said that the CNG price
should be set higher to attract business players into the market.

We, together with business players and the CNG association, are working to determine a price
that is attractive for business players but is also affordable for consumers, said Mohammad
Hidayat Said, a director at the Energy and Mineral Resources Ministrys downstream oil and gas
division.

Pertamina vice president of technology Daniel Purba said the Rp 4,000 level would be attractive
for business players.The plan to convert cars oil fuel consumption into gas dated back to 1988,
but the progress has been slow due to poor infrastructure of CNG stations and concerns over
natural gas supply. As of the end of 2013, there are 30 CNG stations and one mobile refueling
unit (MRU), but most of them are concentrated in the Greater Jakarta area. The Energy and
Mineral Resources Ministry has targeted on additional 29 gas stations and eight MRUs this year.

The state budget will fund two new gas stations and one MRU of the total planned additions,
while state owned oil and gas giant PT Pertamina will establish 4 gas stations and 8 ecostations.
Publicly-listed gas distributor PT Perusahaan Gas Negara has also planned to establish nine gas
stations and three MRUs in greater Jakarta areas. It will also build two gas stations in East Java,
one in West Java and another in Riau.