Jakarta – The government’s ambition to build 5.5 million household gas network (jargas) connections (SR) by 2030 faces major challenges. PT Perusahaan Gas Negara (PGN) Tbk, tasked with expanding this network, admits that the main obstacle lies in the high construction cost and the gas selling price, which is difficult to achieve economically.
Deputy Minister of Energy and Mineral Resources (MEMR) Yuliot Tanjung expressed optimism over the plan but highlighted the importance of funding support to achieve the set target.
“With 5.5 million SR of jargas, we hope to reduce LPG imports by 550 thousand tons annually and save subsidies of around Rp 5.6 trillion. This is a strategic step to reduce the burden on the state budget,” Yuliot said in a press release in Jakarta on Thursday, December 12.
Despite its great potential, the realisation of jargas development has been slow. As of September 2024, only 703,000 SRs have been built through APBN funds, plus 400,000 SRs from non-state budget funding. However, this figure is far from the set target.
PGN’s President Director, Gigih Prakoso, explained that the main challenge lies in the high investment cost of jargas infrastructure. “The cost of building a gas network per household is not cheap, while the selling price set by the government often does not reflect economics. This is a major obstacle for business entities to expand independently,” he explained.
He added that the termination of APBN funding a few years ago also worsened the situation. “When the government tries to rely on the ability of business entities without APBN support, development progress slows down,” he said.
The government revived the Public Private Partnership (PPP) scheme to pursue this ambitious target. However, this effort has not succeeded in attracting a large number of investors. Yuliot revealed that the government will continue to finalise this plan by involving various parties.
“We are preparing a plan so that the construction of jargas can be carried out by SOEs and non-SOE private companies. This includes location mapping and more detailed implementation techniques,” he explained.
Yuliot emphasised that despite the challenges, the government remains optimistic that jargas can be a long-term solution to reduce dependence on LPG imports. According to him, this project has great benefits not only economically but also environmentally. (Hartatik)
Banner photo: Ministry of Energy and Mineral Resources
