Indonesia: Industries seek government commitment to lower gas prices

An association representing four industries, namely ceramic tile, glass, glove and oleochemical, have demanded that the government fulfill its promise to lower gas prices and help them become more competitive both in the domestic and international markets.

“It is regrettable that the regulation has not been implemented. It has caused extended deindustrialization,” said Flat Glass and Safety Glass Producers Association (AKLP) chairman Yustinus Gunawan as quoted by on Monday.

The government has issued Presidential Regulation No 40/ 2016 on natural gas price determination. Currently, only three industries – steel, fertilizer, and petrochemical – have enjoyed the gas price of US$6 per million British thermal units (mmbtu), lower than the market prices of between $8.2 and $9.2 per mmbtu.

Yustinus said businesses had not received the incentive and subsequently lost the momentum to revive the industry. He stressed that the government had to fulfill its promise to lower gas prices because the glass industry consumed large amounts of gas or 40 to 45 percent of national gas production.

Indonesian Diversified Ceramics Producers Association (Asaki) chairwoman Elisa Sinaga also called on the government to fulfill its promise, adding that because of the absence of incentives, the price of gas for the industry was $9.1 per mmbtu in western Java and $7.89 per mmbtu in eastern Java.

He questioned the government’s sluggishness in making a decision on gas prices. He pointed out that the government could have implemented the policy without waiting for the full establishment of state-owned subholding gas company PT Perusahaan Gas Negara (PGN).

Meanwhile, the Economic Coordinating Ministry’s deputy for commerce and industry, Bambang Adi Winarso, said the ministry had not discussed the issue yet.

“We are about to discuss it,” he said as quoted by, adding that there were two possible incentives to be discussed by the government: a cut from non-tax state revenue (PNBP) or a subsidy to the four industries. (bbn)