Indonesia Cuts LNG Price for Industry to Protect Jobs

JAKARTA — The government has lowered the industrial LNG price to 13 US dollars per MMBTU from the previous range of around 20–23 US dollars per MMBTU. The policy is aimed at preserving the competitiveness of national industries and preventing layoffs, especially in sectors hit hardest by soaring energy costs.

Industrial LNG price cut after business complaints

Energy and Mineral Resources Minister Bahlil Lahadalia announced the decision at a press conference at the Parliamentary Complex in Jakarta on Monday. He said the move came after intensive coordination between the government and the House of Representatives, following input from industry associations, business players, and labor unions.

“We believe that ensuring the sustainability of jobs is part of the government’s responsibility,” Bahlil said.

According to him, the government responded quickly because the rise in global gas prices has already squeezed production costs. In a number of factories, the energy burden has become heavier. If left unchecked, the impact would not stop at company balance sheets. The pressure could spread to production, plant utilization, and then to workers.

The industries most vocal about the issue include the ceramics sector. They argue that high gas costs make local products difficult to compete with imports, especially as the domestic market also slows. In such conditions, certainty over energy prices becomes decisive — not merely a figure in a contract, but a matter of whether factory operations can survive.

Industrial gas scheme remains differentiated

Although the industrial LNG price has been lowered, the government is keeping other industrial gas pricing schemes in place. Under the industrial gas policy, the government still provides subsidies through the Certain Natural Gas Price, or HGBT, at around 6.5 to 7 US dollars per MMBTU.

For industrial gas pipeline users outside the HGBT scheme whose supply comes from Java, prices are also maintained at 9.6 US dollars per MMBTU. In other words, the government is not changing the entire gas pricing structure. The adjustment is focused on LNG, which has long imposed higher costs on certain industrial groups.

Bahlil explained that the main problem stems from declining gas production from fields in western Java. As a result, supplies must be brought in from Papua, Sulawesi, Kalimantan, and other areas outside Java. The longer distribution chain adds transportation and regasification costs.

That is where prices rise sharply. Industry had previously received LNG at 20–23 US dollars per MMBTU. This burden is far more expensive than pipeline gas under the subsidy scheme. The gap is wide. And for energy-intensive industries, even a small difference can alter production decisions, expansion plans, and even labor absorption.

Impact on factories, workers and product prices

The new policy is expected to give industries room to keep operations running. For companies, the lower industrial LNG price means production costs could decline. For workers, it offers hope that layoff risks can be reduced. For consumers, more stable energy costs also help limit the risk of higher finished-goods prices in the market.

In the ceramics industry, for example, gas is one of the main cost components. The Indonesian Ceramics Industry Association, or Asaki, had previously said regasified LNG prices reached around 20.5 US dollars per MMBTU. At that level, the ceramics industry had to bear average gas costs of about 15–16 US dollars per MMBTU. That figure is almost twice the HGBT rate of 7 US dollars per MMBTU.

Asaki chairman Edy Suyanto, in a statement confirmed in Jakarta on Wednesday (24/6), emphasized that sustainable access to competitive energy is key to keeping industry operating optimally. He said such certainty is needed to maintain production utilization, absorb labor, and contribute to the national economy.

Asaki also noted that realization of the Certain Industrial Gas Allocation, or AGIT, during January–May 2026 had reached only 47.5 percent. That condition forced industrial energy needs to be covered by LNG regasification at much higher prices. From a business perspective, the situation is clearly difficult. Factories that had planned costs based on one assumption suddenly faced a surge in expenses that was hard to absorb.

Gas supply exists, the issue is distribution costs

Bahlil stressed that the rise in industrial LNG prices was not caused by a national gas shortage. He said domestic gas supply is still sufficient to meet national production targets. “In aggregate, our gas lifting has reached the APBN target. Because of that, we are not importing gas,” he said.

According to him, the main problem lies in the high cost of distributing LNG from outside Java. The government believes this cost structure needs to be evaluated so industry remains competitive. For that reason, under the President’s direction, the government decided to lower the industrial LNG price to 13 US dollars per MMBTU.

The decision is important for industries that rely heavily on gas energy. On one hand, the government wants to safeguard state revenue and energy governance. On the other hand, factories need room to survive when global prices are volatile. The meeting point lies in a pricing policy that businesses can still bear without shutting down production.

Going forward, market attention will focus on implementation in the field. Will LNG supplies at the new price truly reach industry quickly? Can distribution costs be reduced? And is the price cut enough to ease pressure on energy-intensive sectors, especially ceramics, which are most vulnerable to gas cost shocks?