PT Pertamina (Persero), through its subsidiary PT Perusahaan Gas Negara Tbk (PGN), has confirmed it is ready to implement a new government directive capping the price of liquefied natural gas (LNG) for domestic industrial users at US$13 per million British thermal units (MMBtu).
The new rate represents a sharp reduction from the previous benchmark of US$23 per MMBtu, marking a significant shift in Indonesia’s energy pricing policy for the manufacturing sector.
The price cut is designed to shield local industry from rising energy costs, but it places immediate pressure on PGN’s commercial margins.
As the state-owned gas distributor, PGN must now absorb the difference between the capped domestic selling price and the higher international spot rates or long-term contract costs required to supply the gas.
This widening subsidy gap raises concerns about the financial sustainability of the state gas firm and its ability to fund future infrastructure projects without additional government support.
For market participants, the move highlights the ongoing tension between Indonesia’s goal of industrial competitiveness and the commercial realities of its state energy enterprises.