The limited supply of subsidized gas priced at US$7 per MMBTU has forced many manufacturers to source additional gas at prices ranging from $11.5 to $15 per MMBTU.
A worker works at a ceramics firm, PT Arwana Citramulia, in Serang, Banten. (Antara/Rosa Panggabean)
Uncertainty over industrial gas supplies may discourage investment and undermine the competitiveness of Indonesia's manufacturing sector, according to Center of Reform on Economics (CORE) researcher Yusuf Rendy Manilet, raising concerns on longer-term industrial growth.“One of the key risks that needs to be anticipated is gradual deindustrialization,” Yusuf said, as quoted by Bisnis on Sunday, noting that manufacturers were forced to purchase alternative gas supplies with higher costs.
Under the government’s fixed natural gas price (HGBT) program, eligible industries are entitled to gas priced at US$7 per million British thermal units (MMBTU). However, limited supply has forced many manufacturers to source additional gas at prices ranging from $11.5 to $15 per MMBTU.
Indonesian Ceramics Industry Association (Asaki) chairman Edy Suyanto said gas supplied by state-owned distributor PGN had met only around 40 to 45 percent of industry demand under the HGBT scheme during the first five months of the year, forcing manufacturers to source the remainder from more expensive alternatives, such as regasified LNG.
