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Indonesian Firms Battle Prolonged Gas Crisis

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Companies throughout Java and Sumatra remain affected by extended interruptions in natural gas availability, even though the state-run supplier PT Perusahaan Gas Negara (PGN) has stated that situations are slowly becoming more stable.

Some manufacturing plants noted a slight rise in gas pressure following several weeks of significant drops that had compelled them to stop operations, although numerous companies mentioned that supplies were still inconsistent.

A motorcycle rider is being fueled by gas station staff at a service station in Bogor, West Java, Indonesia during November 2023. Image courtesy of NurPhoto through AFP.

Business advocates mentioned that many industries were forced to adopt lighter oils, compressed natural gas (CNG), or even coal—options considered environmentally unfriendly because of their expensive nature and the obstacles they create for Indonesia’s shift toward cleaner energy sources.

The scarcity started on August 13, after unexpected upkeep work carried out by joint venture companies. From that point onward, manufacturing clients have been provided just 48% of their typical supplies, and usage exceeding this limit has resulted in additional charges reaching as high as 120% of the standard liquefaction fee.

As per Indonesia’s Ministry of Industry, the current scenario poses a risk to approximately 135,000 positions within industries dependent on the specific gas price arrangement (HGBT), such as ceramics, fertilizer production, and food manufacturing.

Experts cautioned that should scarcity continue, numerous facilities might have to decrease output, lay off workers, and experience reduced market advantage.

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