Government to extend industrial subsidies for natural gas – Regulations

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Energy and Mineral Resources Minister Arifin Tasrif announced on Monday that the government will continue a natural gas subsidy program for producers in seven industries.

The program, launched in 2020 and set to expire this year, allows producers of steel, ceramics, glass, petrochemicals, fertilisers, oleochemicals and rubber gloves to buy fossil fuels at a fixed natural gas price (HGBT) of $6 per million British thermal units (MMBtu).

The government was also considering expanding the categories of industries covered by the subsidy to those “developing but in the same categories as the seven industries,” Arifin said, as quoted by Antara.

Without subsidies, the domestic price of natural gas could reach $9 per MMBtu, CNBC Indonesia reported in October 2023.

However, expanding the subsidy scheme to keep HGBT low for the industry could also result in revenue losses of trillions of rupees.

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In 2020, the Ministry of Energy and Mines estimated that the country could lose more than 121 trillion rupees in revenue if it kept gas prices low.