25 companies in competition to provide 400,000 gas stoves

The Jakarta Post - 2007-01-08 10:33

Jakarta, January 06, 2007 (The Jakarta Post) - A total of 25 major companies have satisfied the pre-qualification requirements in the government tender to provide 400,000 gas stoves for low-income households in Jakarta and Banten.

Among the 25 companies, which specialize in the manufacturing of kitchen appliances, are PT Star Cosmos, PT Sanken Argadwija, PT Pindad, PT Rinai Indonesia and PT Maspion.

The winner of the tender, which is part of the government's effort to reduce kerosene consumption and thereby cut fuel subsidy spending, will be announced at the end of January, and production will start in early February.

The government has allocated Rp 58.7 billion out of the 2007 budget for the production and distribution of the stoves.

"According to Presidential Decree No. 80/2003, the winner of a tender worth more than Rp 25 billion is obliged to work together with small and medium enterprises. This also applies to the production of the gas stoves," said State Minister for Cooperatives and Small and Medium Enterprises Suryadharma Ali during a media briefing Friday.

"The winning company will have to sign a written commitment to work with small and medium enterprises, and will face legal consequences if it breaches that commitment," the minister said.

"We are hoping that at least three small to medium-scale industrial hubs in Yogyakarta, West Java and Banten will become involved in the production of the stoves. These hubs have hundreds of people working in this sector," Suryadharma said.

"The gas stoves will be made using 100 percent local content," he added.

The winning company would be required to conduct quality control over the production of the stoves.

The ministry expects to distribute a total of one million gas stoves this year, with the first-phase distribution of 400,000 gas stoves to be conducted between March and May.

Low-income households will be given the gas stoves for free by exchanging their old kerosene stoves through their local sub-district offices.

In mid 2007, about Rp 100 billion more will be allocated from the budget, if the legislature agrees to approve the second-phase of the program, which would see the nationwide distribution of 600,000 stoves between October and December.

According to a government official, the energy content of a liter of LPG, currently sold at Rp 4,250 (about 46 US cents), is equal to the energy content of three liters of kerosene, with the price of subsidized kerosene currently standing at Rp 2,275 per liter.