Indonesia’s policy of capping domestic liquefied natural gas (LNG) prices for industrial users is scheduled to expire at the end of this year, removing a key subsidy that has shielded local manufacturers from global market volatility.
The Ministry of Energy and Mineral Resources (ESDM) confirmed that the discount, which sets the price at US$13 per million British thermal units (MMBtu), will remain in effect only until December 31, 2026.
The announcement clarifies the timeline for a policy introduced to protect employment and industrial competitiveness amid rising energy costs.
The expiration of the cap signals a potential shift in cost structures for Indonesian energy-intensive sectors, including cement, steel, and chemicals.
With global LNG prices fluctuating due to geopolitical tensions and supply constraints, the removal of the discount could lead to higher input costs for domestic producers, potentially impacting margins and export competitiveness.
This development follows earlier government moves to restrict domestic LNG prices to balance energy security with industrial support.