Jakarta – The Indonesian government is drafting a new policy to lower upstream gas prices to increase the use of household gas networks (Jargas). Minister of Energy and Mineral Resources Arifin Tasrif revealed that the rule of the game that will reduce gas prices on the upstream side is being discussed.
He is optimistic that lowering upstream gas prices will make businesses more interested in building Jargas facilities at more affordable prices for consumers.
“We are also processing the policy on how the price of upstream gas can be cheap so that the people who receive Jargas at home also have their purchasing power not disturbed,” Arifin said in an official statement, quoted on Monday, August 5.
The government’s plan includes implementing a subsidy policy for the price of upstream gas used by Jargas. “Currently, LPG is subsidised. Later, if we use (domestic) gas, we will subsidise the upstream,” Arifin explained.
Meanwhile, the Head of the Communication Bureau for Public Information Services and Cooperation (KLIK) of the Ministry of Energy and Mineral Resources, Agus Cahyono Adi, added that there is a request from the midstream side to set the upstream gas price at USD 4.72 per MMBTU. The government is reviewing options to lower the price.
Currently, independent Jargas development is often constrained by high costs. This causes the price of gas to reach consumers to also be high. With cheaper upstream gas prices, it is expected that the midstream operated by PT PGN Tbk can take a break.
Until the end of 2023, the realisation of household Jargas connections in Indonesia only reached 900 thousand household connections, far from the target of 1.2 million. This year, the government is targeting the provision of 2.4 million SR.
The government hopes that with this new policy, gas prices for Jargas will drop significantly, increase access and use of natural gas for households, and support energy diversification efforts in Indonesia. (Hartatik)
