Aug

18

Gas in the City, Gas Network

The supply of gas in Indonesia is quite abundant, but unfortunately, has not been used optimally domestically. To meet domestic gas needs, especially for household needs, more is supplied from imports of liquefied petroleum gas (LPG). In fact, gas is delivered to household customers through pipes known as the city gas network or a natural gas network for households (“Jargas”), which is much cheaper than the price of LPG. The main objective of the Jargas is to make people’s lives easier, along with lowering LPG imports and saving on foreign exchange at a macro level.

Presidential Regulation No. 6 of 2019 concerning the Provision and Distribution of Natural Gas through Transmission and/or the Distribution Networks of Natural Gas for Households and Small Customers states that the objectives of the Jargas development program include providing energy access to the community, providing a positive impact on the community through saving fuel costs, realizing an independent and environmentally friendly community economy, and reducing the burden of fuel and/or LPG subsidies in the household sector.

In line with above regulation, the Covid-19 pandemic has not hindered the spirit of the Government c.q. the Directorate General of Oil and Gas, Ministry of Energy and Mineral Resources to build a Jargas in 2021. The original plan was that the Jargas of Cirebon would be built in 2020. However, due to a budget refocusing, the construction of the gas pipeline construction was postponed to 2021.

With strict health protocols, on 26 July 2021, the first distribution was carried out to the house of one of the Jargas recipients in Kalijaga Village, Cirebon City, which is a penetrating gas pipeline construction and will be built for 1,210 household connections (“SR”) in this sector.

This is the first gas connection for the 2021 budget construction in Cirebon. This gas connection will be continued at the next Jargas recipient house, until the completion of construction, which will be completed in November 2021, where 4,515 SRs will be built for Cirebon City and 3,758 SRs in Cirebon Regency. Jargas were first built in Cirebon in 1974 by the State Gas Company, PT Perusahaan Gas Negara (PGN) Tbk. (“PT PGN”). As of 2018, the Jargas has served 486,229 SR with a pipe length of around 5,900 km. The gas pipelines were built with the majority of the state budget at 67%, the rest was built by PGN and PT. Pertamina (Persero) (“Pertamina”). Furthermore, the source of gas supply for Cirebon City and Cirebon Regency comes from Pertamina EP.

The success of Jargas construction during the pandemic, of course, cannot be separated from the support of the Regional Government and the local community. The main thing in infrastructure development is the spatial planning in a city or area. If Cirebon has a Jargas development master plan, a business entity such as PT PGN can build a Jargas independently based on the community’s capacity.

Moreover, the implementation of the Jargas construction has created jobs and increase people’s income, which for Cirebon City has meant a workforce of 320 people with a total man-days of 20,119 working days (HOK). As for Cirebon Regency, there are 335 people with a total of 17,966 working man-days (HOK).

Household Connections (SR) have also been established in Lhokseumawe, Deli Serdang, Medan, Palembang, Prabumulih, Musi Rawas, Serang, Cirebon, Bogor, Sidoarjo, Pasuruan, Probolinggo, Bontang, North Penajam Paser, Balikpapan, Tarakan, Samarinda, and Pali. In 2021, the plan is to build household connections (SR) in 18 cities/districts, namely North Aceh Regency, Dumai City, Jambi City, Palembang City, Depok City, Bekasi City, Karawang Regency, Purwakarta Regency, Cirebon Regency, Lamongan Regency, Bojonegoro Regency, Mojokerto, Pasuruan Regency, Probolinggo Regency, Banggai Regency, Wajo Regency and Kutai Kartanegara, which was carried out by Pertamina through its subsidiary PT PGN.

This project is an investment opportunity and will create job opportunities for the local area, and hopefully this project can be started for other regions in order to provide efficient, clean and cheap fuel to the community. For further information regarding this project, as well as the legal aspects, the Schinder Law Firm has had years of experience in energy project. Should you wish to do so, feel free to drop us an email at info@schinderlawfirm.com.

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