State-controlled gas distribution company PT Perusahaan Gas Negara Tbk (PGN) has announced a substantial increase in the price of gas derived from LNG regasification, now set at $16.77 per MMBTU. This price will be effective from January 1 to March 31, 2025.
Domestic industrial customers have raised concerns regarding the new PGN LNG regasified gas pricing policy, which follows the expiration of the government’s special gas price program (known as HGBT) at the end of 2024.
PGN has emphasized that the new LNG regasified gas price policy is aimed at ensuring a stable energy supply for industries, especially amidst the challenges posed by limited pipeline gas availability.
Fajriyah Usman, PGN’s Corporate Secretary, explained the rationale behind the price increase and outlined the company’s strategic efforts to adapt to the evolving energy landscape.
According to Fajriyah, PGN relies on two primary sources to meet customer demand: pipeline gas supply and regasified LNG. While pipeline gas prices remain relatively stable due to government regulation and their detachment from oil prices, PGN has increasingly turned to regasified LNG sourced from three domestic LNG cargoes starting in mid-2024. The price of regasified LNG is determined by the Indonesia Crude Price (ICP), which is also regulated by the government.
“The characteristics of regasified LNG differ from pipeline gas due to the liquefaction, transportation, and regasification processes, all of which contribute to a different cost structure,” Fajriyah explained on January 6.
She added that pipeline gas supply shortages are expected to persist in 2025, making regasified LNG a crucial alternative for meeting industrial energy needs.
“Increasing the share of regasified LNG supply is an effective solution to ensure that our customers continue to receive the energy they require,” she noted.
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With the price adjustment and the increased reliance on regasified LNG, PGN is committed to being a strategic partner for national industries.
“This reflects PGN’s efforts to support energy resilience while offering flexible alternative solutions amidst the shifting energy landscape,” Fajriyah concluded.
Industry reactions
Amid declining competitiveness and reduced production capacity caused by gas quota restrictions and high gas surcharge costs imposed by PGN, the Indonesian Ceramic Industry Association (Asaki) expressed surprise and concern over the new LNG regasified gas price policy.
From January 1 to March 31, 2025, ceramic manufacturers are required to pay $16.77 per MMBTU for gas—a price Asaki describes as burdensome and detrimental to the industry’s competitiveness.
“This is the highest gas price in Southeast Asia. It means that for every unit of gas used beyond the AGIT industrial quota, businesses must pay 2.5 times more than the HGBT price of $6 per MMBTU,” said Edy Suyanto, Chairman of Asaki, to Kontan.co.id on January 6.
The government’s HGBT program, which allowed seven industrial sectors, including ceramics, to enjoy a subsidized gas price of $6 per MMBTU, expired on December 31, 2024. The government is currently reviewing the possibility of introducing a new HGBT policy.
Yustinus Gunawan, Chairman of the Natural Gas Users Industry Forum (FIPGB), noted that the LNG regasified gas pricing policy had previously been implemented in May 2024 at a price of $13 per MMBTU.
He pointed out that LNG regasified gas prices are significantly higher than the cost of pipeline gas, which is priced at $9.16 per MMBTU, and far higher than the HGBT price of $6 per MMBTU.
“However, the availability of pipeline gas has been very limited, essentially halting since May 2024,” Yustinus told Bisnis.com on January 6.
Yustinus further emphasized that the continuation of the HGBT program would support industrial development, helping to drive economic growth to 5.2% in 2025 and up to 8% by 2027.
“It is crucial that the government swiftly announces the continuation of the HGBT program at $6 per MMBTU at the plant gate,” he stressed. “If the government delays the certainty of HGBT continuation, industries will lose momentum for immediate revitalization and will require more time to optimize operations.”
“If the HGBT, as a key energy driver for the industry and the backbone of the economy, continues to be delayed, the government of Indonesia must act decisively and quickly. Otherwise, Indonesia risks falling behind in the rapidly evolving global competition,” he concluded.
Editing by Reiner Simanjuntak
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