Lessons from Indonesia

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Warren Phillips
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1 Switching from Kerosene to LP Gas : Lessons from Indonesia February 2010 Marketing & Trading Directorate PT. Pertamina (Persero)

2 WHAT THE PEOPLE FEEL I can cook faster now, especially in the afternoon when I have to work. I have to go as 5.30 A.M. Previously, I never have time to prepare breakfast for my kids. But since I can cook faster. I can serve them breakfast although its just tempe, said Nining, one of Conversion Package Receiver.

3 TILL THE END OF 2009, KEROSENE TO LPG CONVERSION PROGRAM HAS BEEN COVERING 15 PROVINCES ALL OVER INDONESIA Converted in Converted in 2009 To be converted in 2010 Will not be converted

4 THE KEY ACHIEVEMENT # Households & SME Converted 54,0 Will be Converted 44 out of 54 Millions 3,9 15,1 24,4 9,3 Converted Total Replacement Value : Kerosene vs. LPG 1 liter Kero replaced by 0.34 kg LPG Target Kerosene LPG Gross Saving Conversion Cost State s Gross Subsidy Saving Nett Saving Up to 2.6 Bio USD 1 USD = Rp. 9,324

5 GOVERNMENT SUBSIDY SAVING REACH 1.5 BILLION USD Remarks Feb 2010 Target Achievement Initial Packages Distributed (Million Packages) LPG Volume LPG (Million Ton) Kerosene Withdrawal (Million KL) Gross Subsidy Saving (Million USD) Initial Packages Cost (Million USD) Nett Subsidy Saving (Million USD) , , , (21.45) , The remaining kerosene volume pushed up the ground work for only about 4.6 million KL is much smaller than 2009 Government target for 5.8 million KL. While the volume of LPG PSO reached 1.7 million MT of the 2009 Government target for 1.6 million MT. So that it can be concluded that the conversion program run faster with a very significant subsidy savings of approximately 2.6 billion USD. 1 USD = Rp. 9,324, 1 Liter of Kerosene ~ 0.4 Kg LPG

6 KEROSENE SALES VOLUME DROP FROM 830,000 KL/MONTH TO 270,000 KL/MONTH 1, Initiation Period Conversion Start Demonstration arose everywhere Govt. Regulation Issued Dry DKI Jakarta 16 May 08 Dry Jabodetabek 17 Aug 08 Dry Jogjakarta 10 Nov 08 Dry West Java 30 April Kerosene Withdrawal Volume (Thousand KL/month) Kerosene Sales Volume (Thousand KL/month) achievement Volume decrease 5.04 M KL/year Sales LPG PSO (Thousand MT/month) Volume LPG 1.76 M MT/year Dec-09 Nov-09 Oct-09 Sep-09 Aug-09 Jul-09 Jun-09 May-09 Apr-09 Mar-09 Feb-09 Jan-09 Dec-08 Nov-08 Oct-08 Sep-08 Aug-08 Jul-08 Jun-08 May-08 Apr-08 Mar-08 Feb-08 Jan-08 Dec-07 Nov-07 Oct-07 Sep-07 Aug-07 Jul-07 Jun-07 May-07 Apr-07 Mar-07 Feb-07 Jan-07 Dec-06 Nov-06

LPG INFRASTRUCTURE GROWTH RAPIDLY DURING CONVERSION

Infrastructure Storage LPG Vessels Filling Station Pre

3,700 MT/day 6 LPG Pressurized vessels @1,800 MT 66

2008-2010 On shore tank: 167,000 MT Floating storage:

LPG semi-refrigerated vessels @ 11,400 MT 6 LPG

operated 11 Pertamina LPG Depo 15 COCO Stations 176

7 LPG INFRASTRUCTURE GROWTH RAPIDLY DURING CONVERSION PERIOD WITH AVERAGE STOCKPILE ABOVE 15 DAYS Infrastructure Storage LPG Vessels Filling Station Pre Conversion < 2007 On shore tank: 136,000 MT Thruput: 3,700 MT/day 6 LPG Pressurized MT 66 stations (12 kg) Capacity 6,000 MT Conversion Period On shore tank: 167,000 MT Floating storage: 120,000 MT Thruput: 9,000 MT/day 3 44,000 MT 5 LPG semi-refrigerated 11,400 MT 6 LPG Pressurized 1,800 MT 202 stations already operated 11 Pertamina LPG Depo 15 COCO Stations 176 Private Stations 499 permits has been issued. Capacity ~ 10,080 MT Skid Tank 5,000 MT/day 9,000 MT/day.

8 NOWADAYS CONVERSION PROGRAM DRIVE INVESTMENT UPTO 1.9 BILLION USD AND ABSORB MORETHAN 28 THOUSAND LABORS IN THE FUTURE IT WILL DRIVE INVESTMENT UPTO 2.7 BILLION USD AND ABSORB MORETHAN 38 THOUSAND LABORS *) Investment in million USD 1, , , ,184.1 Present Investment Future Investment Present Labor Future Labor Private Sectors Government

9 THE KEROSENE TO LPG CONVERSION PROGRAM TAKE BENEFIT TO WHOLE NATIONS Indonesia Government Business Environment End Users Environment CO2 Reduction State s Gross Subsidy Saving Up to 2.6 Bio USD # New Investor 529 Energy Cost Saving) 42% (4 USD/Month) # of Trees saved **) 46.6 Mio Nett Saving 1.5 Bio USD Value of Investment 1.9 Bio USD % of program Supporter *) 94.1 % # of Cars taken Equivalent **) 2.8 Mio *) Based on Internal Survey. November 2009 **) Modified from GreenworksAsia Report on Emission Reduction from Conversion Program, November 2008

10 KEY SUCCESS FACTORS 1. Strong Government Policy 2. Strong & Effective Implementation 3. Readiness of Logistic & Infrastructures LPG Producers Terminal LPG Refrigerated Land Terminal (Tg Uban) Floating Storage Offloading (FSO) LPG Bottle Producers LPG Pressurized Depot Retester Workshop Filling Station Agent Sub Agent Retailer End User

11 IMPACT CONVERSION TO THE LPG DEMAND-SUPPLY (MT) Demand - Supply Real A Demand PSO (3 kg) 1,839,617 3,001,528 3,484,159 non PSO 1,135,991 1,267,435 1,305,424 Total Demand 2,975,608 4,268,963 4,789,584 B Supply Pertamina s Refinery 770, , ,024 Pertamina s Upstream 51,093 47,000 47,000 Other Domestic Producers 1,213,179 1, ,292,085 Import *) 1,091,483 2,009,243 2,543,474 Total Supply 3,126,468 4,268,963 4,789,584 *) Import volume will decrease as production from domestic producers increase.

12 LPG BUSINESS GROWTH VS INFRASTRUCTURE /hari Pre Conversion Conversion Periode Post Conversion Infrastructure Pre Conversion (Before 2007) Conversion Periode ( ) 2010) Post Conversion (After 2010) 1 Storage * 136,000 Mton 267,000 Mton 345,000 Mton 2 Vessel 6 Vessels 1,800 Mton 5 Vessels 10,000 MT 6 Vessels 1,800 Mton 3 FSO Vessels MT 6-8 Vessels 10,000 MT 10 Vessels 1,800 Mton 1 FSO Vessels 45,000 MT 3 4 Filling Station Filling Capacity Skid Tank Transport Capacity 5,000 Mton/day 9,000 Mton/day 17,000 Mton/day 5,000 Mton 9,000 Mton/day 17,000 Mton/day * As per Government s Requirement : LPG Stockpile 7.5 days for NPSO. 11 days for PSO

13 #3. REAL BENEFIT FOR END USERS *) *) Based on Internal Survey. November 2009

14 THANK YOU Terima Kasih

15 HOUSEHOLD COOKING COST SAVING Product Unit Price Consumption volume for 8 days Consumption cost for 8 days Consumption Cost for 1 month (30 days) Kerosene 27 Cent USD/Liter 8 Liter 2.15 USD 8.04 USD LPG 3 Kg 46 Cents USD/Kg 3 Kg 1.37 USD 5.13 USD Saving 78 Cents USD 2.92 USD Notes : o 1 USD = Rp. 9,324 o 1 Liter of Kerosene ~ 0.4 Kg LPG

16 GOVERNMENT SUBSIDY SAVING Remark Initial Packages Distributed (Million Packages) LPG Volume LPG (Million Ton) Kerosene Withdrawal (Million KL) Gross Subsidy Saving (Million USD) Initial Packages Cost (Million USD) Nett Subsidy Saving (Million USD) Notes : o 1 USD = Rp. 9,324 o 1 Liter of Kerosene ~ 0.4 Kg LPG 2010 Feb 2010 Target Total Achievement , , , (21.45) ,465.30

Commercial-in-Confidence Ashton Old Baths Financial Model - Detailed Cashflow

Commercial-in-Confidence Ashton Old Baths Financial Model - Detailed Cashflow Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 2,038 2,922 4,089 4,349 6,256 7,124 8,885 8,885 8,885 8,885 8,885 8,885 9,107