Indonesia's ministry backs gas bill to boost manufacturing growth

Jakarta (ANTARA) - Indonesia's Ministry of Industry said the ratification of the Draft Government Regulation on Natural Gas for Domestic Needs would help boost manufacturing competitiveness and accelerate the target of achieving 8 percent economic growth.

Ministry spokesperson Febri Hendri Antoni Arif said the regulation would ensure stable gas supplies and prices for industries, resolving long-standing issues affecting the implementation of the Specific Natural Gas Price (HGBT) policy.

"If the draft regulation is enacted, industrial gas issues, particularly those related to the HGBT program, will be permanently resolved. There will no longer be supply disruptions or price fluctuations that reduce industrial utilization and potentially trigger layoffs," Febri said in a statement on Saturday.

He added that the regulation would strengthen the national upstream gas sector, support President Prabowo Subianto's energy security agenda, and help manufacturing contribute significantly to the government's target of achieving 8 percent economic growth by 2029.

Under the HGBT policy, natural gas prices for designated industrial sectors are capped at US$6.5-7 per million British thermal units (MMBtu).

Febri said the draft regulation has been initiated by the ministry since November 2024 and has received support from the Coordinating Ministry for Economic Affairs, but has yet to receive serious follow-up from the Ministry of Energy and Mineral Resources (ESDM).

According to him, the implementation of the HGBT policy has remained suboptimal because of the Specific Industrial Gas Allocation (AGIT) policy.

He said the implementation of the ESDM ministerial decree on domestic gas allocation has not been fully realized, threatening the productivity and competitiveness of the manufacturing sector.

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"As of 2025, industrial sectors have received only around 60 to 70 percent of the natural gas allocation stipulated under ESDM Ministerial Decree No. 76.K/2025," he said.

He added that the allocation under the decree represents only 57 percent of the volume previously allocated under ESDM Ministerial Decree No. 91/2023.

The ministry said the gas shortage is most severe in West Java and Lampung. HGBT fulfillment in the West Java corridor fell from 88.72 percent in 2023 to 78.68 percent in 2024 and 65.69 percent in 2025. By April 2026, realization had dropped further to an average of 46.36 percent.

The shortage has forced manufacturers to switch to regasified liquefied natural gas (LNG), which is significantly more expensive. LNG regasification prices were projected to reach US$20.57 per MMBtu in June 2026.

The ministry said prolonged supply disruptions have reduced capacity utilization in the ceramic industry to below 60 percent, contributing to Indonesia's decline from the world's fifth-largest ceramic producer in 2023 to seventh place in 2024.

The ministry also said the HGBT policy generated Rp592.89 trillion (around US$33.2 billion) in economic value between 2020 and 2025 through higher industrial sales, tax revenues, new investment, and fertilizer subsidy savings.

As a short-term solution, the ministry proposed revoking the AGIT policy and ensuring stable gas supplies and prices in line with ESDM regulations. It also urged the government to promptly ratify the draft regulation as a long-term solution.

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Translator: Ahmad Muzdaffar, Raka Adji

Editor: Anton Santoso

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