Indonesia industrial gas shortages threaten manufacturing sector

Indonesia's manufacturing sector is facing significant operational challenges due to shortages in natural gas supplies under the Certain Natural Gas Price (HGBT) policy. While the HGBT program was designed to boost industrial competitiveness by providing lower gas prices, industry leaders report that physical supply constraints are undermining its benefits.

In West Java, gas distribution has been restricted since mid-September 2026, with PT Perusahaan Gas Negara Tbk reportedly limiting deliveries to approximately 78 percent of contract volumes. The Forum Industri Pengguna Gas Bumi (FIPGB) noted that only 27.5 percent of allocated gas is being supplied at the subsidized HGBT rate of 7 USD per MMBTU, forcing companies to rely on more expensive regasified LNG at roughly 20 USD per MMBTU.

The impact is severe for specific sectors; the Indonesian Ceramic Industry Association (ASAKI) reported that ceramic production utilization has dropped below 70 percent, with some manufacturers cutting production by half. These disruptions threaten job security, with concerns raised regarding potential layoffs for approximately 1,500 workers. Industry representatives have called for the formation of a dedicated body to manage national industrial gas fulfillment to ensure economic targets and industrial stability.