JAKARTA: The utilization of domestic steel industry probably only reach 70% out of ideal accomplishment at 90% due to shortage gas supply needed for production process and power generator.For the time being, gas needs for domestic steel industry reaches 200-230 MMscfd, mainly for production process, said Co-Chairman Flat Product Indonesian Iron and Steel Industry Association (IISIA), Irvan K. Hakim.In the past 10 years, gas consumption of steel industry has not been changed although the number of factories continues to rise. In the end of the day, industry must establish efficiency. This affects to the lower utilization of domestic steel industry that is supposed to reach 90%, he said in a seminar entitled The Development of Steel Industry in Indonesia, yesterday.Referring to the gas supply realization from PT Perusahaan Gas Negara (Persero) Tbk, supply for basic metal industry and metal fabrication has reached 15% out of last years average supply of 825.1 MMScfd.This year, PGN only secures 751 MMscfd gas supply or much lower than last year realization. It will be even lower due to the damaged Maleo Santos block, East Java.Supposes gas need is fulfilled, the utilization of steel factory at least can be raised by 12 basis points to 82%. Certainly it will grant significant impact as it will make production expense to be more competitive.Lower gas supply has intensified in the past five years although Upstream Oil and Gas Supervisory Agency (BPMIGAS) in its financial statement highlighted rising domestic natural gas production.Its all about point of views, if we expect industrialization to successfully accomplished, energy supply must be secured.Must be protectedSteel industry is a strategic industry thus it must be protected, said Director of Metal Industry at Industry Ministry, Surya Wiryawan. Unfortunately, this industry strongly depends on energy supply despite its nature that is capital intensive, high risk and long term.If we are willing to intensify competitiveness, there must be certainty over energy supply. It is not about the price as it is solely about the certain gas supply, he said.Putu added that for the time being, domestic steel consumer depends on 3-4 million ton imported steel per year. Referring to the current economic growth, the difference between the supply and demand may reach 6 million ton.He suggested domestic steel supply to focus in supporting other strategic industries that highly depend on import such as shipping and automotive as well as infrastructure.There are several investment projects in Indonesia, for instance joint venture company of PT Krakatau Steel with PT Antam and PT Meratus with investment value of IDR1 trillion, valuing IDR1 trillion and focusing to produce 310,000 sponge iron per year. Another example is investment of China Nickel Resources valuing US$220 million, focusing to produce 1 million ton billet.Other examples are Semeru Surya with less than US$60 million investment and Delta Prima with around US$60 million investment, producing sponge iron.Government must seriously implement the Decree of Industrial Minister No. 103/2009 on the road map of steel industry development, said a researcher on Center of Economic Research at Indonesia Institute of Science, Siwage Dharma.There has not been any realization of the road map. We need a synergy for all ministries, he said.According to him, domestic industry requires an incentive to stimulate investment that develops technology and intensify the use of local raw materials. Governments role is limited as we cannot see any tangible impact from the existing tax incentive. Whether the steel industry really has the incentive? he said. (11) (t02/msw)

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