ASAKI: LNG Price Reduction Helps Reduce Energy Costs by 40 Percent

JAKARTA - The Indonesian Ceramic Industry Association (ASAKI) assessed that the government's decision to reduce the price of liquefied natural gas (LNG) for industry would reduce energy pressure by around 40 percent of the total production costs.

ASAKI Chairman Edy Suyanto said that the policy was considered to provide business certainty while opening up room for the expansion of the national ceramic industry.

"We express our highest appreciation to the government for the attention and quick steps it has taken. This policy is able to reduce the pressure on energy costs, which have been one of the biggest challenges for the national ceramic industry," said Edy in an official statement, Monday, June 29.

According to Edy, the policy is a breath of fresh air for the ceramics industry, which had previously faced pressure from high energy costs, given that the price of LNG was cut from the original 20-23 US dollars per MMBTU to 13 US dollars per MMBTU.

With the adjustment of the policy, the average cost of ceramic industry gas is estimated to fall to 9.5-10 US dollars per MMBTU or equivalent to around 38-40 percent of the total production cost.

The reduction in costs is considered important to maintain the sustainability of industrial operations while reducing the risk of labor reduction and layoffs.

Even so, Edy said, ASAKI hopes that the government can increase the allocation of the Specified Coal Gas Price (HGBT) to around 70-80 percent, as it was previously implemented.

This step is considered important to strengthen the resilience of the national industry in the midst of intense regional competition and the rapid flow of imported products, especially from China and India.

In addition to helping maintain the sustainability of the industry, a more competitive energy policy is also believed to provide a multiplier effect for the national economy.

With the improvement of gas supply certainty and business climate, according to Edy, the national ceramic industry is optimistic that it can realize its expansion plan in the 2025-2029 period.

The plan includes an increase in production capacity of around 80 million square meters, an investment of IDR 12 trillion, and the potential to absorb around 6,000 new workers.

Previously, the government decided to lower the price of LNG for the industrial sector to 13 US dollars per MMBTU from the original 20-23 US dollars per MMBTU as a step to maintain the competitiveness of the national industry while preventing layoffs.

The decision was taken after the government responded to the aspirations of industry players amid rising global gas prices that burdened production costs.

This was revealed by the Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia in a press conference at the Parliament Complex, Senayan, Jakarta, today.

"It was reduced to 13 US dollars per MMBTU. So from 20 to 23 US dollars per MMBTU, it is now reduced to 13 US dollars per MMBTU," he said.