Switching from Kerosene to LP Gas : Lessons from Indonesia February 2010 Marketing & Trading Directorate PT. Pertamina (Persero)
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.
TILL THE END OF 2009, KEROSENE TO LPG CONVERSION PROGRAM HAS BEEN COVERING 15 PROVINCES ALL OVER INDONESIA Converted in 2007-2008 Converted in 2009 To be converted in 2010 Will not be converted
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 2007 08 09 2010 Total Replacement Value : Kerosene vs. LPG 1 liter Kero replaced by 0.34 kg LPG 102 21 2.098 547 5.384 1.767 844 2007 08 09 2010 304 6.132 2.973 2010 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
GOVERNMENT SUBSIDY SAVING REACH 1.5 BILLION USD Remarks 2007 2008 2009 2010 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) 3.976 15.078 24.355 0.526 14.927 43.936 0.033 0.592 1.840 0.304 3.018 2.770 0.102 2.098 5.384 0.844 7.334 8.429 64.35 981.34 1,371.89 163.66 815.25 2,581.23 85.80 388.25 629.78 12.11 343.32 1,115.93 (21.45) 593.09 742.11 151.55 471.93 1,465.30 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
KEROSENE SALES VOLUME DROP FROM 830,000 KL/MONTH TO 270,000 KL/MONTH 1,000 900 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 09 800 Kerosene Withdrawal Volume (Thousand KL/month) 700 336 335 376 600 Kerosene Sales Volume (Thousand KL/month) 390 410 438 432 441 508 468 492 550 561 500 2009 achievement 400 837 792 499 496 455 441 Volume decrease 5.04 M KL/year 300 421 393 399 390 200 100-93 101 99 363 339 323 281 270 112 121 131 137 153 163 170 188 181 205 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 PERIOD WITH AVERAGE STOCKPILE ABOVE 15 DAYS 1 2 3 4 Infrastructure Storage LPG Vessels Filling Station Pre Conversion < 2007 On shore tank: 136,000 MT Thruput: 3,700 MT/day 6 LPG Pressurized vessels @1,800 MT 66 stations (12 kg) Capacity 6,000 MT Conversion Period 2008-2010 On shore tank: 167,000 MT Floating storage: 120,000 MT Thruput: 9,000 MT/day 3 VLGC @ 44,000 MT 5 LPG semi-refrigerated vessels @ 11,400 MT 6 LPG Pressurized vessels @ 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.
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 1,545.1 38,206 941.3 28,176 961.6 1,184.1 Present Investment Future Investment Present Labor Future Labor Private Sectors Government
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
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
IMPACT CONVERSION TO THE LPG DEMAND-SUPPLY (MT) Demand - Supply Real 2009 2010 2011 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 770,713 957,040 907,024 Pertamina s Upstream 51,093 47,000 47,000 Other Domestic Producers 1,213,179 1,255.680 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.
LPG BUSINESS GROWTH VS INFRASTRUCTURE /hari Pre Conversion Conversion Periode Post Conversion 2007 2008 2009 Infrastructure Pre Conversion (Before 2007) Conversion Periode (2007-2010) 2010) Post Conversion (After 2010) 1 Storage * 136,000 Mton 267,000 Mton 345,000 Mton 2 Vessel 6 Vessels Pressurized @ 1,800 Mton 5 Vessels Semiref @ 10,000 MT 6 Vessels Pressurized @ 1,800 Mton 3 FSO Vessels Refrigerated @ 45.000 MT 6-8 Vessels Semiref @ 10,000 MT 10 Vessels Pressurized @ 1,800 Mton 1 FSO Vessels Refrigerated @ 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
#3. REAL BENEFIT FOR END USERS *) *) Based on Internal Survey. November 2009
THANK YOU Terima Kasih
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
GOVERNMENT SUBSIDY SAVING Remark 2007 2008 2009 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 3.976 15.078 24.355 0.526 14.927 43.936 0.033 0.592 1.840 0.304 3.018 2.770 0.102 2.098 5.384 0.844 7.334 8.429 64.35 981.34 1,371.89 163.66 815.25 2,581.23 85.80 388.25 629.78 12.11 343.32 1,115.93 (21.45) 593.09 742.11 151.55 471.93 1,465.30