Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia explained that the government has conducted a comprehensive evaluation of industrial gas prices after receiving various inputs from the business community regarding high energy costs that burden the production process.
According to Bahlil, the government is maintaining the Specific Natural Gas Price (HGBT) scheme for seven industrial sectors, at US$6.5 per mmbtu for raw materials and US$7 per mmbtu for fuel. Meanwhile, the price of non-HGBT pipeline gas is also guaranteed to remain unchanged and remains at an average of US$9.6 per mmbtu.
Significant changes were made to the non-HGBT LNG price, which was previously between US$20 and US$23 per mmbtu. After an evaluation, the government decided to lower it to US$13 per mmbtu to reduce the burden on the industry.
“The President is truly interested in protecting industry and jobs, so we were instructed. The input from industry is approximately US$15 to US$16 per MMBTU. But after we calculated it and approved it with the President, it was reduced to US$13 per MMBTU,” Bahlil said.
The business community welcomed the policy. Shinta Kamdani, Chairwoman of the Indonesian Employers’ Association (Apindo), assessed the government’s decision as a concrete response to the challenges faced by the industry due to high production costs in recent times.
“This policy step to reduce industrial gas prices certainly sends a positive signal that the government is listening to the need to maintain the competitiveness of the national industry amidst the pressure of increasingly high production costs,” Shinta said.
According to him, the LNG price reduction has the potential to generate savings of around 35 to 43 percent. This efficiency is believed to help companies maintain business sustainability, increase productivity, and open up space for investment and industrial expansion.
On the other hand, labor groups also appreciated the government’s swift action. Lowering energy costs is considered to strengthen the sustainability of company operations, thereby mitigating the risk of workforce reductions. This policy is also seen as a demonstration of the government’s commitment to protecting businesses and workers simultaneously, while simultaneously strengthening the foundations of national economic growth through increasingly competitive industries. (*)