I

ndonesia’s gas market is a perfect example of how the law of supply and demand does not always work the way Economics 101 textbooks say it should.

Despite the country’s abundant supply of gas, the government is mulling a plan to import the commodity in an attempt to quickly push down the country’s gas price, which is among the highest in the region.

Speaking after a limited Cabinet meeting on Tuesday to discuss the government’s efforts to lower gas prices, Coordinating Economic Minister Darmin Nasution said such a move would see businesses immediately enjoying lower gas prices.

“Yes, we are still trying to find a way to cut down prices, but it is not easy,” Darmin said. “This is why we are looking at other alternatives. However, we have to seriously study how [the gas] would be imported.”

At around US$9 per million British thermal units (mmbtu), Indonesia’s average gas price is much higher than that of most of its regional peers. Gas in Malaysia and Singapore hovers at around $4 per mmbtu.

Business players have long voiced concern over the high gas prices, as they decrease the competitiveness of local manufacturing, a sector whose contribution to economic growth has gradually dwindled in the past decade.

The high gas prices in Indonesia are mostly attributable to a lack of infrastructure and a lengthy supply chain. The Mahakam energy field in East Kalimantan and the Tangguh field in West Papua, which jointly contribute half of Indonesia’s total gas production, for example, are located far from Java, where most of the country’s major manufacturing facilities are located.

Cabinet Secretary Pramono Anung said gas imports would help end users get the most competitive price.

“Industry [players] will deal directly with the state, or another company assigned to import gas. Many [countries] have already offered [gas] with extremely low prices, including Saudi Arabia, Iran and Qatar,” he said, without detailing the prices offered.

President Joko “Jokowi” Widodo previously instructed his Cabinet to cut end-user gas prices to below $6 per mmbtu for seven industrial sectors in order to develop the downstream sector and create a significant multiplier effect in the economy.

However, only the petrochemical, fertilizer and steel industries have been privy to the price cut starting Jan. 1, following the issuance of an Energy and Mineral Resources Ministerial Decree late last year.

While gas prices for the other four industries — oleochemical, glass, ceramics and rubber gloves — remain in limbo, the ministerial decree also only allows gas price cuts for state-owned companies in the petrochemical, fertilizer and steel industries.

In 2015, Indonesia produced 19.1 million tons of liquefied natural gas (LNG), 85 percent of which was shipped overseas with Japan, South Korea and China the top three export destinations.

The government’s plan to import gas has raised questions, as domestic supply is barely absorbed in the country. Data from the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) shows that only 39 of 64 LNG cargoes allocated for the domestic market were absorbed in 2015.

R. Gunung Sardjono Hadi, the president director of Pertamina Hulu Energi (PHE), a subsidiary of state-owned energy firm Pertamina operating in the upstream oil sector, said the company’s bottom-line had decreased following the implementation of the new gas price in the petrochemical, steel and fertilizer industries. PHE plans to implement various internal efficiency measures to boost its production in order to reduce the “damage” caused by the new price.

Meanwhile, ExxonMobil Indonesia, the local division of the US-based ExxonMobil Corporation, stated that it needed to make further calculations for the projected price.

“Each gas field has a situation that is different from others, hence the difference in economical prices of gas produced at each field,” said ExxonMobil Indonesia’s vice president for public and government affairs, Erwin Maryoto.

Since taking office in 2014, President Jokowi has repeatedly used market interventions to quickly bring down prices of important commodities.

In 2015, the President forced state cement company PT Semen Indonesia to slash its prices, sending shock waves through the cement industry. Last year, Jokowi demanded the application of one price for fuel sold in the remote province of Papua, causing losses of more than Rp 1.5 trillion (US$ 111 million) for state energy company Pertamina.

ReforMiner Institute researcher Pri Agung Rakhmanto said that although upstream gas prices abroad might be lower, there were still additional transportation and distribution costs to think about.

“It would be better to conduct a complete calculation of the domestic economic situation,” he said.