2 days ago
Indonesia's gas subsidy cut could slash industrial output, trigger layoffs: Industry Ministry
JAKARTA: Industry Ministry spokesperson Febri Hendri Antoni Arief said the ministry had received a flood of complaints from private companies reliant on the government's fixed natural gas price (HGBT) programme.
According to him, supply disruptions and steep surcharges, such as state gas company PGN's tariff of US$16.77 per mmbtu, are squeezing manufacturers, particularly in energy-intensive sectors like ceramics, glass, steel, fertiliser, petrochemicals and oleochemicals.
'Energy costs make up a significant share of production expenses in these industries. Any increase in prices or cuts in HGBT supply erode margins, lower factory utilisation and, in the long run, deter investment, especially in energy-intensive manufacturing,' Febri said in a statement on Thursday (Aug 14).
He added that this appears to be a recurring problem, despite the existence of a presidential decree that fixes the price and ensures supply continuity.
'No party or institution should attempt to override the President's order by raising the price above $6.5 or restricting the supply,' he noted.
Indonesia's industrial gas demand is estimated at 2,700 million standard cubic feet per day (mmscfd), but the available HGBT supply is only 1,600 mmscfd, with about half, roughly 900 mmscfd, allocated to state-owned enterprise (SOE) consumers.
He noted that SOEs such as PLN and Pupuk Indonesia have been the largest HGBT beneficiaries.
'Private manufacturers, the backbone of the national industrial base, are often treated differently. This imbalance risks undermining the business climate,' he said.
'If the private sector's share continues to shrink, the consequences will be immediate: reduced capacity, lower efficiency and potentially mass layoffs.'
According to the ministry, 134,794 industrial workers rely on a stable HGBT supply. If volumes fall to just 48 percent of demand, a significant share of these jobs could be lost.
The sectoral breakdown of workers at risk includes: fertiliser (10,420), petrochemicals (23,006), oleochemicals (12,288), steel (31,434), ceramics (43,058), glass (12,928) and rubber gloves (1,660).
'These figures are a serious alarm. Every gas policy must weigh its impact on industrial sustainability and the livelihoods it supports,' Febri said.
Ministry data shows several sectors are already facing declining utilisation due to gas constraints.
The national ceramics industry, for example, averaged 70 to 71 percent utilisation in the first half of 2025.
'If supply disruptions persist, even critical sectors like fertiliser, which supports President Prabowo's food self-sufficiency programme, could see output decline,' Febri warned.
Previously, Indonesian Ceramics Association (Asaki) chairman Edy Suyanto said the ceramic industry in West Java is now limited to 48 percent of its HGBT gas allocation, down from the previous 60 percent set by PGN.
In eastern regions, the cap is 40 percent.
'From August 13 to August 31, only 48 percent of the HGBT gas volume can be used, while the remainder will incur a surcharge of US$14.8 per mmbtu due to force majeure,' Suyanto said on Wednesday, as reported by Bisnis.
He urged the government to resolve the disruption by ensuring adequate HGBT quotas.
The industry is also grappling with a surge in low-priced ceramic imports, which is putting additional pressure on domestic production. - The Jakarta Post/ANN
