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View all search resultsGas subsidy cut could slash industrial output, trigger layoffs: Ministry
Supply disruptions and steep surcharges, such as state gas company PGN’s tariff of $16.77 per mmbtu, are squeezing manufacturers, according to Industry Ministry spokesperson Febri Hendri Antoni Arief.
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PGN's floating storage and regasificaiton unit (FSRU) in Lampung. (PGN/PGN)
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ndustry Ministry spokesperson Febri Hendri Antoni Arief said the ministry had received a flood of complaints from private companies reliant on the government’s fixed natural gas price (HGBT) program.
According to him, supply disruptions and steep surcharges, such as state gas company PGN’s tariff of US$16.77 per mmbtu, are squeezing manufacturers, particularly in energy-intensive sectors like ceramics, glass, steel, fertilizer, petrochemicals and oleochemicals.
“Energy costs make up a significant share of production expenses in these industries. Any increase in prices or cuts in HGBT supply erode margins, lower factory utilization and, in the long run, deter investment, especially in energy-intensive manufacturing,” Febri said in a statement on Thursday.
He added that this appears to be a recurring problem, despite the existence of a presidential decree that fixes the price and ensures supply continuity.
“No party or institution should attempt to override the President’s order by raising the price above $6.5 or restricting the supply,” he noted.
Read also: Industry group decries supply shortage, high prices in cheap gas program
Indonesia’s industrial gas demand is estimated at 2,700 million standard cubic feet per day (mmscfd), but the available HGBT supply is only 1,600 mmscfd, with about half, roughly 900 mmscfd, allocated to state-owned enterprise (SOE) consumers.
