Indonesian firms struggle amid prolonged gas shortage

Several factories reported a modest improvement in gas pressure after weeks of drastic declines that had forced them to halt production, but many said supply remained unreliable.

Gas station officers are refueling a motorcycle driver at one of the gas stations located in Bogor, West Java, Indonesia in November 2023. Photo by NurPhoto via AFP

Industry representatives noted that numerous sectors had been compelled to switch to light oil, compressed natural gas (CNG) or even coal – alternatives described as unsustainable due to high costs and the setback they pose to Indonesia’s energy transition goals.

The shortage began on August 13, following unplanned maintenance by cooperation contractors. Since then, industrial consumers have received only 48% of their usual allocations, with consumption above this threshold incurring surcharges of up to 120% of the base regasification price.

According to Indonesia’s Ministry of Industry, the situation threatens around 135,000 jobs in sectors reliant on the special gas pricing scheme (HGBT), including ceramics, fertilizers and food processing.

Analysts warned that if shortages persist, many plants may be forced to reduce capacity, cut staff and face declining competitiveness.