PGN Gas Prices Planned To Increase October 2023, Apindo Reveals The Impact Of Layoffs To Inflation

Illustration (Photo: Doc. Antara)

JAKARTA - The plan to increase the price of certain non-priced natural gas (HGBT) on October 1 by PT Perusahaan Gas Negara Tbk (PGAS) or PGN is considered to be able to trigger a reduction in industrial competitiveness and potential inflation due to rising prices in the community.

Chairman of the Manufacturing Industry Division of the Indonesian Employers' Association (Apindo) Bobby Gofur Umar said the decrease in industrial competitiveness could have an impact on the risk of termination of employment (PHK).

"The increase in natural gas prices for production will have a macro impact. First, it will reduce or cut production by 30 percent of Indonesia's total gas production," Bobby said in an official statement received by VOI, Monday, September 4.

Bobby said the second impact of the planned increase in non-HGBT industrial gas prices could reduce industrial purchasing power and reduce labor. Third, there is a risk of reducing Indonesia's exports and reducing market share in the global market.

Fourth, the decline in the investment climate because Indonesia is less competitive with other countries. "Fifth, the increase in natural gas prices ultimately has the potential to cause inflation, which of course we all avoid," he said.

According to Bobby, the impact of the increase in gas prices has been felt by a number of industrial sectors, including the food industry which uses gas energy of around 50 percent of the production costs. Thus, this increase will reduce competitiveness both domestically and globally exported.

"The food industry has switched from fossil fuels to gas because it applies environmentally friendly principles," he said.

The plan to increase the price of natural gas is also complained by the textile industry. The reason is, this industry is known to have employed around 3.5 million workers and is still recovering after COVID-19.

"This industry asks for the cancellation of the gas price increase for the Certain Industrial Gas Allocation (AGIT) by PGN for the resilience of the national textile industry," said Bobby.

Meanwhile, Deputy Chairperson of the Apindo Manufacturing Industry, Rachmat Harsono, is of the view that there should be no reason for PGN to increase the price of natural gas.

"The business world asks related parties to provide transparent information regarding the calculation of raw materials, transportation, and others before deciding to increase the price of natural gas," he added.

Previously reported, the Ministry of Industry hopes that there will be no increase in the price of Certain Natural Gas (HGBT) worth US$6 per Million Metric British Thermal Units (MMBTU) for seven industrial sectors, which is planned for October 2023.

Plt. The Director General of Chemical, Pharmaceutical and Textile Industries (IKFT) of the Ministry of Industry, Ignatius Warsito, admitted that his party had communicated with various parties regarding the HGBT increase plan which was deemed unnecessary.

"We also understand in the last two years how we have struggled with this $6 gas program, right, to accelerate the utility of the seven sectors that have been implemented in accordance with Presidential Regulation (Perpres). We will continue to oversee, so that this (price increase) will not happen," Warsito said in a media briefing in Jakarta, Monday, August 28.

Warsito said that his party understands that the industrial sector has survived the COVID-19 pandemic and continues to take advantage of the USD 6 HGBT program.

Therefore, he said, the Ministry of Industry will continue to oversee the HGBT increase plan and hope that there will be no increase.

"The spike is indeed a big blow to the industry in our sector. If the price of 6 US dollars is not more than 10 percent, right, but from the total industrial sector which is not fair (fair) if the commercial rate jumps above 10 US dollars, many will shake, this needs to be held," said Warsito.