Realisation of consumption below target, government continues to extend specific natural gas prices

Jakarta – The Indonesian government insists on continuing the natural gas price for specific industries (HGBT) policy of USD 6 per MMBTU for seven industrial sectors, even though the realisation of allocated gas consumption often does not reach the specified target.

The special price program is eligible for seven industries, namely, the fertiliser industry, petrochemical industry, oleochemical industry, steel industry, ceramic industry, glass industry, and rubber glove industry.

Coordinator of Oil and Gas Program Preparation at the Ministry of Energy and Mineral Resources (EMR), Rizal Fajar Muttaqien, explained that evaluating HGBT users is ongoing. The Ministry of Energy and Mineral Resources works with others in this regard but coordinates with the Ministry of Industry.

“We expect an evaluation from each natural gas user,” he said in the webinar ‘Examining the Readiness of Gas Supply for the Industrial and Power Generation Sectors’, Wednesday, February 28.

Muttaqien emphasised that if the HGBT recipient industry does not comply with the initial commitment, the government will not hesitate to reduce or even stop the sustainability of the HGBT policy.

“Of course, there will be an evaluation from our friends from the Ministry of Industry to be able to continue or reduce their supply or stop the HGBT policy,” he added.

The HGBT policy, regulated in Minister of Energy and Mineral Resources Decree No. 134/2020, is scheduled to end in 2024. However, the Ministry of Industry has proposed to continue the policy.

“It’s just that we from EMR are still waiting for a comprehensive evaluation of the implementation of the HGBT that has been running so far, and of course, when the HGBT is decided to be continued, of course, it also pays attention to the availability of the state share used for gas price adjustments,” said Muttaqien.

The government decided to continue the gas price policy by considering state losses due to decreased state revenue from the upstream oil and gas sector.

According to the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), by 2023, state revenues from the upstream oil and gas sector will drop by more than USD 1 billion due to the implementation of the gas price policy.

The government is also evaluating the multiple impacts of the gas price policy to ensure that it provides optimal benefits to the state. (Hartatik)

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