DistantNews
Support us
🇮🇩 Indonesia /Economy & Trade

Indonesia's Ceramic Industry Eyes 40% Savings with LNG Price Cut

From Tempo · () Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

At a glance

News Sources not specified New plan
  • Indonesia's ceramic industry expects significant savings after the government reduced industrial LNG prices to $13 per MMBTU.
  • The price cut, down from previous highs of $23 per MMBTU, is expected to lower gas costs to 38-40 percent of production expenses.
  • Industry leaders anticipate this will boost competitiveness, prevent layoffs, stimulate investment, and create thousands of new jobs.

The Indonesian ceramic industry is poised for a significant boost following the government's decision to slash industrial liquefied natural gas (LNG) prices to $13 per Million British Thermal Units (MMBTU). This move is hailed by the Indonesian Ceramic Industry Association (ASAKI) as a crucial step to alleviate energy cost pressures and maintain the sector's competitiveness.

ASAKI Chairperson Edy Suyanto emphasized that the policy provides essential business certainty, crucial for an industry grappling with rising costs. Previously, gas expenses constituted about 50 percent of total production costs. The new pricing, combined with an additional allocation of Specific Natural Gas Prices (HGBT), is projected to reduce these costs to 38–40 percent of total expenses, equivalent to $9.5–$10 per MMBTU.

This policy provides business certainty, maintains the competitiveness of our national industry, and protects employment sustainability.

— Edy SuyantoASAKI Chairperson Edy Suyanto stated that the policy provides much-needed business certainty amid the mounting pressures the industry has faced in recent years.

Suyanto highlighted that lower energy overheads will enable manufacturers to sustain operations, avert widespread layoffs, and optimize production capacity. He also urged the government to restore the HGBT allocation to its previous 70–80 percent level. This, he believes, would further enhance the domestic industry's ability to compete against imported products, particularly from China and India.

With stable gas supply and more competitive energy pricing, ASAKI anticipates substantial industry expansion between 2025 and 2029. This growth could lead to an increase in manufacturing capacity by approximately 80 million square meters, attract up to Rp12 trillion in new investments, and generate around 6,000 new jobs. Minister of Energy and Mineral Resources Bahlil Lahadalia confirmed the new rate, calling it the result of intense negotiations aimed at safeguarding industrial sustainability, especially in western Java, and marking a steep decline from previous highs around $23 per MMBTU.

Therefore, we have locked in the industrial LNG price at US$13 per MMBTU.

— Bahlil LahadaliaMinister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia announced that the industrial LNG price had been successfully lowered to US$13 per MMBTU.
DistantNews Editorial

Originally published by Tempo in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

More Stories

From Our Blog