News
04 October 2024

Continued Success in Indonesia Transitioning to LPG New Sectors Targeting Fishing and Farming

Pertamina has followed their successful kerosene to LPG conversion programme, which targeted domestic households, with a new focus on fishermen and farmers. As a result over 140,000 fishing boats and 80,000 irrigation pumps, are now running on LPG, further reducing CO2 emissions in the country.

 

In 2004 subsidised kerosene was consumed in Indonesia by 92% (48 of 52 million) of households. The majority of households used it for daily cooking. Most had a low-to-medium expense, under USD 150 per month.

In 2006 the subsidy for kerosene in Indonesia was 57% of the state’s total petroleum product subsidy. Subsidised kerosene had been used for decades as a cooking fuel and any policy to reduce the petroleum fuel subsidy by increasing the kerosene price would have been a sensitive social issue with the potential of disturbing the country’s stability.

One key reason for the removal of the kerosene subsidy was that it was simply not reaching the end user. Often the subsidised fuel was being diverted into areas of misuse. Two examples were mixing with other non-subsidised fuels in the industrial and commercial sectors, or by smuggling abroad where kerosene was more expensive.

A decision was taken in 2007 by the Indonesian government to replace kerosene with LPG as the primary household cooking fuel across the country. Pertamina were tasked to implement this. This decision would greatly reduce the fuel subsidy burden.

 

In 2012 Pertamina and WLGA produced a case study on the kerosene to LPG conversion programme highlighting progress to date. The link to the case study is here:: kerosene-to-lp-gas-conversion-programme-in-indonesia.pdf (worldliquidgas.org.

This decision to switch from kerosene (and other traditional dirty fuels) to LPG was based on:

- Improving the health for the many poor people directly affected by indoor pollution from household fuels.
- Reducing emissions of greenhouse-related pollutants compared to solid fuels, such as biomass and coal in traditional stoves.
- Reducing deforestation.
- Increasing availability of agricultural waste for soil enhancement and other purposes in some regions.
- Eliminating time and labour devoted to gathering biomass fuels and reduces efforts devoted to cooking and cleaning, especially benefiting women and children.

 

The programme was launched in 2007 and phased over a number of years following a feasibility study and a one-month market test by Pertamina in areas of Jakarta.

The initial programme goal was to convert 42 million households and micro businesses nationally. This was later increased to 54-58 million units. All citizens meeting the programme requirements would have the right to receive the free ‘Initial Package’, consisting of a 3 kg LPG cylinder, a first gas-fill, and a one-burner stove, hose, and regulator.

As the programme ramped up the supporting infrastructure also grew with new storage facilities, cylinder filling plants and supporting equipment manufacturing factories including cylinders, valves, regulators, stoves and hoses.

Within six years Pertamina had distributed over 54 million packages to households, and small-medium sized enterprises. During this period the WLGA held workshops in Jakarta to discuss progress and address any issues.

By 2012 the volume of subsidised LPG had exceeded 3.6 million mt/year. This was calculated to have reduced CO2 emissions by nearly 8.5million mt/year.

The programme has been gradually extended across the country and today PT Pertamina, through PT Pertamina Patra Niaga, distributes LPG in 3 kg cylinders in 411 cities, through a distribution channel consisting of 33 LPG Terminals, over 5,500 LPG 3kg Dealers and in excess of 250,000 LPG 3kg sub-dealers. This reaches over 95% of the population.

A decision was taken in 2016 to extend the programme to fishermen and farmers.

  

Fishermen

The criteria for fishermen was having a fishing boat with a maximum size of five gross tons and using a gasoline engine with a maximum power of thirteen horse power. They had to have an ID card, a family card and a fisherman card. Also they had to have never received a similar package before.

The kit consists of a small gasoline engine converted to run on LPG together with the other equipment required.

Farmers

The criteria for the farming community was that farmers had to demonstrate ownership of their own rice fields with a land area of ​≤ 0.5 hectares (≤ 2 hectares for transmigrant areas) by showing land ownership documents. The scheme targeted a gasoline driven irrigation pump with a drive engine ≤ 6.5 horse power. The farmers had to show they had not received similar benefit before. The kit is shown here.

The Package

Unlike the package for the domestic sector which included a stove for cooking the fishermen and farmers received a 6.5hp gasoline engine which had been converted to LPG.

The fishermen typically consume around five litres of gasoline a day equivalent to 1kg of LPG, using the 6.5hp. With the gasoline price at around US$0.65/litre and the LPG price around US%0.54/kg the savings were around US$2.7/day or US$800/year.

The farmers save around US$150 every three months which is the harvest cycle time working their 0.5 hectares of land. The irrigation pump operates 15 hours/day consuming 6kg of LPG.

Some of the comments from the beneficiaries, especially fisherman, observed that the engines were running slightly hotter than the gasoline engines. But apart from lower running costs, the benefits included lower emissions, no water pollution from fuel spillage, less maintenance and less chance of fuel pilferage. The overall reaction to running on LPG to gasoline was very positive.

 

Conversion Distribution Map 2016-2024

Since 2016, when the scheme started, the number of conversions has exceeded 140,000 in the fishing sector and 85,000 in the farming sector.

In 2023 Indonesia imported over seven million mt of LPG with demand exceeding 8.8 million mt, an increase of 1.7% (source: Global Statistical Review 2024 – Argus/WLGA).