Jakarta moves to cap LNG prices as industry and unions push back

JAKARTA, June 29 — Indonesia will cut the price of liquefied natural gas (LNG) supplied to industrial users to US$13 (US$1=RM4.08 = RM53.04) per million British thermal units (MMBTU), down from about US$20 to US$23 per MMBTU currently paid by manufacturers.

Energy and Mineral Resources Minister Bahlil Lahadalia said the decision was made during a government coordination meeting responding to geopolitical pressures affecting the national economy, particularly in the gas sector.

“We believe ensuring the sustainability of jobs is part of the government's responsibility. The industry proposed a price of around US$15-US$16 per MMBTU. After we made our calculations and reported them to the president, it was lowered to US$13 per MMBTU,” he said at a press conference streamed on YouTube by local media.

He said the government had received requests over the past 10 days from the ceramics industry association, other industrial groups and the Confederation of Indonesian Trade Unions (KSPI) before finalising the new pricing structure.

Bahlil said LNG prices had surged to between US$20 and US$23 per MMBTU after a decline in gas production in western Java, forcing industries in West Java, Banten and Jakarta to rely on supplies transported from Papua, Sulawesi and Kalimantan.

He said the logistics chain – including transport, regasification and pipeline distribution – had significantly increased delivery costs for industrial LNG.

He added that Indonesia’s gas output remained within state budget targets, meaning the country does not need to import gas.

Pipeline gas under the government’s Certain Natural Gas Price (HGBT) scheme will remain at US$6.5 to US$7 per MMBTU, while non-HGBT industrial pipeline gas stays at US$9.6 per MMBTU. — Bernama

Indonesia said today it would not increase fuel prices despite rising budget pressures from the war in the Middle East. — AFP pic