Indonesia LPG Business Acceleration Kerosene to LPG Conversion Effect
WLPGA Sub-Continent Regional Summit “LP Gas: Exceptional Energy for the Sub-Continent” 14 – 15 February 2012 New Delhi, India
Kimball Chen Energy Transport Group
Facts : Background And Solution 1. Huge fuel subsidy (~USD 8.0 billion /year) and ~70% subsidy are for Kerosene. The huge volume of kerosene also affect on environment issue
3. LPG is cheaper and better (Cents USD, 1 USD = Rp. 8,465.87 average on August 2011)
Remarks
2. Kerosene subsidy increases eventhough the government reduce its volume significantly 14 12 10 8 6 4 2 0
12,3 11,7 11,8 11,9 11,4
Conversion start 10,0
9,9
0,8 7,9
Volume (million KL) Subsidy (Billion USD) 1,3
0,7
1,5
1,6
3,8
4,2
1,0
5,0
2,0
0,6 0,4 0,2
Volume based on calorific Value
Kerosene
LPG
1 liter
0.4 kg
Market Price
93
120
Retail Subsidized Price
30
51
Subsidized Price
64
69
Amount of subsidy
64
25
0 2001
02
03
04
05
06
07
2008
Saving per liter SOLUTION : Kerosene to LPG Conversion Program To Convert residential fuel from Kerosene to LPG by Target Converted distributing initial package (3 kg LPG bottle, stove, and regulator set) for free, followed by withdraw Kerosene Potential Subsidy Saving and replaced by LPG (both subsidized)
+
+
38 8,000,000 3.05
Cents USD KL/year Billion USD /year
Indonesia LPG Road Map : Kerosene To LPG Conversion Effect 2007-2011 Kerosene to LPG Conversion Program
.... up to 2007 Kerosene is widely used 9,9
2011 onwards .... LPG will be the main cooking fuel 56,8
48,1 3,9
7,2
5,8 1,1 NPSO
Kero (mio KL)
4,2
0,1
LPG Distribution Subsidy (mio MT) (mio Pcs) Saving (bio USD)
2
Green Area converted in 2009 with total amount of 24,4 million packages.
2,0
2,9 PSO
Non-PSO
1,1 NPSO Kero (mio KL)
LPG Distribution Subsidy (mio MT) (mio Pcs) Saving (bio USD)
Kero (mio KL)
1 USD ~ Rp. 9.000
LPG Distribution Subsidy (mio MT) (mio Pcs) Saving (bio USD)
3 Orange Area targeted to finish in 2010 , for about 9.3 million packages
1 Red Area converted in 2007 and 2008 with total amount of 19 million packages.
3,6 PSO 1,1 NPSO
4 Blue area will be converted in 2011
5 Yellow Area will not be converted, except around the purple area on 2012
Indonesia LPG Business Acceleration
Post Conversion ~17.000 MT/day Conversion Period ~14.000 MT/day +11% +28%
+57%
Pre Conversion ~4.000 MT/day
+42%
PSO NPSO +56%
2005 2006 Jan- Apr- Jul-07 Okt- Des- Jan- Apr- Jul-08 Okt- Des- Jan- Apr- Jul-09 Okt- Des- 2010 2011 2012 2013 2014 2015 07 07 07 07 08 08 08 08 09 09 09 09 3
LPG Infrastructure Growth Rapidly During Conversion Period
Infrastructure
1
2
Pre Conversion (Before 2007)
Conversion Periode (2007-2012)
Post Conversion (After 2012)
Storage *
• On shore tank 136,000 MT • On shore tank 167,000 MT • Thruput 4,000 MT/day • Floating storage 182,000 MT • Thruput 14,000 MT/day
• Total storage 345,000 MT • Thruput 17,000 MT/day
Vessel
• 6 LPG Pressurized vessels
• 3 VLGC @44,000 MT • 6 LPG semiref vessels @11,400 MT • 9 LPG Pressurized vessels @1,800 MT
• 1 VLGC @44,000 MT • 8 LPG semiref vessels @11,400 MT • 10 LPG Pressurized vessels @1,800 MT
@1,800 MT
3
Filling Station Filling Capacity
• 66 stations (12 kg) • Capacity 6,000 MT
• 360 stations already operated • 11 Pertamina LPG Depo • 4 Private LPG Depo • 22 COCO Stations • 323 Private Stations • Capacity ~ 14,000 MT/day
• Total capacity ~ 21,900 MT/day
4
Skid Tank Capacity
• 4,000 MT/day
• 14,000 MT/day.
• 17,000 Mton/day
* As per Government’s Requirement : LPG
Switching Journey Dry Jabodetabek 17 Aug 08
Conversion Start
1 000 Demonstration arose Initiation Period everywhere
Govt. Regulation Issued
Dry DKI Jakarta 16 May 08
Dry South Sumatera Nop 09
Dry Jogjakarta 10 Nov 08
Dry Lampung Nop 10
60,00
Dry West Java 30 April 09
Dry Central Java Dec 09
Dry Bali Sep 10
Dry South Sulawesi Feb 11
900
52,86 50,00 48,12
800 43,41
700 338
Initial Package Distribution Cumulative (Million Packages)
40,00
600 567 500
400
300
837
Kerosene PSO Withdrawal Volume (Thousand KL/month)
668
674
30,00
792
Kerosene PSO Sales Volume (Thousand KL/month)
20,00
19,05 251
499 200
210
100
270 LPG PSO Sales Volume (Thousand MT/month)
274
10,00 93
137
141
-
juil. 11 juin 11 mai 11 avr. 11 mars 11 févr. 11 janv. 11 déc. 10 nov. 10 oct. 10 sept. 10 août 10 juil. 10 juin 10 mai 10 avr. 10 mars 10 févr. 10 janv. 10 déc. 09 nov. 09 oct. 09 sept. 09 août 09 juil. 09 juin 09 mai 09 avr. 09 mars 09 févr. 09 janv. 09 déc. 08 nov. 08 oct. 08 sept. 08 août 08 juil. 08 juin 08 mai 08 avr. 08 mars 08 févr. 08 janv. 08 déc. 07 nov. 07 oct. 07 sept. 07 août 07 juil. 07 juin 07 mai 07 avr. 07 mars 07 févr. 07 janv. 07 déc. 06 nov. 06
Until July 2011, initial package already distributed to 52.86 million households and SME’s in 22 provinces
About 674 thousand kilo liters of subsidized kerosene has been withdrawn monthly and replaced by 274 thousand tons of subsidized LPG
The switching of kerosene to LPG from 2007 until July 2011 resulting on saving subsidized for the Government of Indonesia for about 4.74 bio USD
Conversion Impact To The LPG Demand-supply LPG Demand 6 000
Thousand MT
5 000
4 263
4 422
4 770
4 701
4 850
4 936
4 000
PSO
3 000
NPSO
2 000
Total Demand
1 000 2010
2011
2012
2013
2014
2015
Year
LPG Supply 6 000
Thousand MT
5 000
4 685
4 770
4 701
4 850
4 936
4 263
4 000 2 715
3 000 2 000
1 783
1 778
1 846
2010
2011
2012
2 795
2 881
Total Domestik Total Impor Total Supply
1 000 2013
Year
2014
2015
Key Success Factors 1. Strong Government Policy • • •
One Strong Leader : Vice President Cut the Bureaucracy Effective Ministerial Coordination Who : EMR, Industrial, Internal Affair.
Regulator
2. Strong & Effective Implementation • • • •
Executor
Create Effective Model using Conversion Cycle Ensure the Readiness Logistic & Infrastructures. Strong Financial Capability Who : Pertamina
Object / Target
3. Real Benefit for End Users • • • •
Fulfill their basic needs : cheaper, always available and safe. Quick benefit that they can feel it for instance. They don’t concern about subsidy. Who : Household and SME
Real Benefit For End Users *)
*) Based on Fiscal Policy Office Survey, November 2008
Conclusion LPG conversion program will dramatically change the energy landscape of Indonesia and will reduce fuel’s subsidy at significant amount.
To support the LPG conversion, it takes a lot of investment opportunities that will heat up Indonesia LPG industry.
Indonesia Government plays an important role to secure the implementation of this program, furthermore integrated and sustainable energy policy should be developed to provide better energy for society.
Challenges Worse Perception Numbers of LPG incidents blown up by media caused people worse perception. Intensive and continuous socialization about LPG safety usage will eliminate the perception. Geographic Archipelago LPG infrastructure must be prepared to cover all Indonesia area which consist of so many islands. LPG conversion area spreaded from the crowded city to the villages with small population. From Seaside to Deepforest LPG packages delivered to the fishermen in the seaside and also to the farmer in the deepforest. We must provide the LPG refill nationwide.
THANK YOU SYUKRON TERIMA KASIH