ASIATODAY.ID, JAKARTA – Indonesia has unveiled a sweeping energy pricing policy aimed at strengthening the competitiveness of its manufacturing sector by cutting industrial liquefied natural gas (LNG) prices by nearly 37%, as the government moves to cushion businesses from rising energy costs and safeguard employment.
Under the new policy announced on Monday, the price of non-HGBT LNG supplied to industrial users in West Java, Banten, and Jakarta will fall from US$20.57 per MMBTU to US$13 per MMBTU, marking one of the most significant government interventions in Indonesia’s industrial energy market in recent years.
The decision follows direct instructions from President Prabowo Subianto, who has prioritized protecting domestic industries and preserving jobs amid continued volatility in global energy markets.
Minister of Energy and Mineral Resources, Bahlil Lahadalia said the policy was formulated after intensive consultations with manufacturing associations, including Indonesia’s ceramic industry, labor unions, parliament, and other government institutions.
“Our priority is to ensure industries continue operating and workers remain employed. After evaluating proposals from industry players and reviewing the economic impact, the government decided to reduce the LNG price to US$13 per MMBTU,” Bahlil said in Jakarta on June 29.
Lower Energy Costs to Strengthen Competitiveness
The government views affordable natural gas as a strategic pillar for maintaining Indonesia’s industrial competitiveness, particularly as manufacturers face increasing production costs and tighter competition across Asia.
Indonesia’s industrial gas supply currently comes from three main sources:
– Government-regulated Certain Natural Gas Pricing (HGBT);
– Non-HGBT pipeline gas; and
– Non-HGBT LNG.
Prices under the HGBT scheme remain unchanged at US$6.5 per MMBTU for industrial feedstock and US$7 per MMBTU for fuel use.
Meanwhile, non-HGBT pipeline gas supplied in West Java will remain stable at an average of US$9.6 per MMBTU, ensuring that industrial users connected to pipeline networks are protected from additional cost increases.
LNG Becomes Critical as Domestic Gas Production Declines
The government acknowledged that Indonesia’s conventional pipeline gas production is gradually declining due to natural depletion of mature gas fields.
As a result, LNG is expected to play an increasingly important role in ensuring reliable gas supplies for industrial clusters, particularly in regions where pipeline gas availability continues to shrink.
Recognizing that LNG is generally more expensive because its pricing is linked to international crude oil benchmarks, the government has introduced an efficiency-driven pricing mechanism designed to reduce costs across the entire LNG value chain.
The new pricing structure will optimize upstream gas costs, liquefaction, transportation, infrastructure, and commercial distribution so that savings can be passed directly to industrial consumers.
Supporting Investment and Employment
Beyond reducing production costs, the government believes the policy will help maintain investor confidence, sustain manufacturing expansion, and protect millions of jobs supported by Indonesia’s industrial sector.
Bahlil stressed that preserving employment is a key responsibility of the state, adding that competitive energy pricing is essential for ensuring long-term industrial growth.
The Ministry of Energy and Mineral Resources will work closely with upstream regulator SKK Migas, state-owned enterprises, and gas distributors to oversee gas allocation, pricing implementation, and supply reliability.
PGN Ready to Implement Policy
State-controlled gas distributor PT Perusahaan Gas Negara (PGN), Pertamina’s gas subholding, welcomed the government’s decision and confirmed its readiness to implement the revised pricing framework.
PGN President Director Arief K. Risdianto said the company would continue ensuring reliable and secure gas supplies while supporting Indonesia’s industrial competitiveness and national energy security.
A Strong Signal for Indonesia’s Industrial Future
The latest policy underscores Indonesia’s determination to balance affordable energy, supply security, and sustainable resource management while reinforcing its position as one of Southeast Asia’s leading manufacturing and investment destinations.
For investors and manufacturers, the LNG price cut sends a clear message: Indonesia is prepared to intervene decisively to keep its industrial sector competitive, attract long-term investment, and support economic growth despite uncertainty in global energy markets. (AT Network)
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