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Govt to extend industrial subsidy for natural gas
The government has decided to extend the 2020 subsidized natural gas program for industries and is also mulling over expanding eligible industry categories, although IPGI has asked that the program be evaluated since it benefited only downstream businesses.
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A mini liquefied natural gas (LNG) terminal operated by state-owned electricity company PLN and built by PT Pelindo Energi Logistik, a subsidiary of state-owned port operator PT Pelindo III, stands at Bali’s Benoa Port in this undated file photo from 2016. (Tribun-Bali.com) (Tribunbali)
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nergy and Mineral Resources Minister Arifin Tasrif announced on Monday that the government would continue its natural gas subsidy program for manufacturers in seven industries.
The program, launched in 2020 and due to expire this year, allows manufacturers of steel, ceramics, glass, petrochemicals, fertilizers, oleochemicals and rubber gloves to purchase the fossil fuel at a fixed natural gas price (HGBT) of US$6 per million British thermal units (MMBtu).
The government was also considering expanding the industry categories for the subsidy to those “growing, but in the same categories as the seven industries”, said Arifin, as quoted by Antara.
Without the subsidy, the domestic price of natural gas could reach $9 per MMBtu, CNBC Indonesia reported in October 2023.
However, extending the subsidy program to keep the HGBT low for industries could also result in foregone revenue amounting to trillions of rupiah.
In 2020, the Energy and Mineral Ministry estimated the country could forego over Rp 121 trillion in revenue for keeping gas prices low.
Coordinating Economic Minister Airlangga Hartarto said separately that the government would instruct oil and gas giant Pertamina to build gas infrastructure, including liquefied natural gas (LNG) regasification facilities, and to allow industrial estates to develop regasification projects to enable LNG imports.
