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View all search resultsIndustry bemoans LNG supply shortfall despite latest price cut
An inherent supply-demand gap in the HGBT policy and a disconnect in the domestic supply chain are just a couple of issues that the government must address to ensure sustainability in the long term, says a forum for industrial LPG customers.
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A worker manages a production line on April 1, 2011, at a factory of ceramics company PT Arwana Citramulia in Serang, Banten. (Antara/Rosa Panggabean)
M
anufacturers are warning that the government's much-publicized move to slash prices of liquefied natural gas (LNG) for industry may prove to be more promise than relief, as stagnant supplies and declining production could leave factories struggling to secure enough fuel.
The warning from industry representatives and energy analysts alike came after Energy and Mineral Resources Minister Bahlil Lahadalia lowered the LNG price ceiling for industrial consumers from US$23 to $13 per metric million British thermal unit (MMBtu), effective June 29.
The price cut, which was achieved by compressing margins from the upstream to the downstream, aims to provide immediate cost certainty for domestic manufacturers. Yet industry players say price relief means little without guaranteed supply access.
"What needs to be clarified is this: The $13 gas is not a new supply but rather a new price for the same product," said Ahmad Zuhdi Dwi Kusuma, associate principal at the Energy Shift Institute.
"Lowering prices is a matter of policymaking; increasing volume is a different challenge entirely," Zuhdi added.
Reducing the price does not alter the existing policy on cheap gas, or HGBT, for seven priority industries, including fertilizers, petrochemicals and steel, which continue to pay fixed prices of $6.5 to $7 per MMBtu for pipeline gas. the commodity
Pipeline gas prices also remain unchanged for other sectors, at $9.6 per MMBtu. This has created a multitiered pricing structure, raising questions about why some industries still lack access to affordable supplies.
