The national ceramics and glass industry has asked the government to abolish the Specific Industrial Gas Allocation (AGIT) policy, which is considered to be hampering investment and the smooth supply of gas.

The Association of Various Indonesian Ceramic Industries (ASAKI) assessed that the AGIT policy implemented by State-owned gas distributor PT Perusahaan Gas Negara (PGN) could hamper potential investment worth Rp8 trillion (US$484,7 million) in the national ceramic industry.

ASAKI Chairman Edy Suyanto said that this investment is part of the second phase of ceramic industry expansion and is estimated to increase production capacity to 93 million square meters, absorbing around 7,000 workers.

"There are concerns that this potential will be delayed again due to the uncertainty of industrial gas supplies and the high cost of gas surcharges due to the AGIT policy," Edy said on Thursday, March 20, 2025.

Edy emphasized that the elimination of AGIT by PGN is the key to the entry of this investment. According to him, AGIT makes the gas supply to the manufacturing sector not smooth and increases production costs.

PGN applies two prices for the ceramic industry, namely the price according to the Specific Natural Gas Price (HGBT) and the surcharge price. PGN is reported to only provide gas worth 78 percent of the planned gas usage in the western part of Java and 55 percent in the eastern part of Java.

If ceramic manufacturers exceed the quota, gas prices will jump 139.57 percent to US$16.77 per Million British Thermal Units (MMBTU) of HGBT. In addition, the HGBT paid by manufacturers this year has increased 7.69 percent annually to US$7 per MMBTU.

Edy assessed that the AGIT policy would thwart the increase in the utilization of national ceramic industry production from 66 percent last year to 80 percent by the end of 2025. Currently, national production utilization reached 74.5 percent in the first quarter of this year.

"The national ceramic industry does not object to the increase in HGBT as long as the AGIT policy or gas usage quota is eliminated," he said.

Regulatory certainty

Chairman of the Sheet and Safety Glass Association, Yustinus Gunawan, said that gas-using manufacturers are awaiting certainty regarding the implementation of the Decree of the Minister of Energy and Mineral Resources (ESDM) No. 76/2025 which is expected to eliminate AGIT. However, there is still uncertainty regarding PGN's compliance with the regulation.

"The certainty of the new AGIT policy can only be confirmed at the end of March 2025. We are always anxiously waiting for information from PGN and other industrial gas distribution companies," said Yustinus, on Thursday, March 20, 2025.

He explained that his institution was requesting a refund of the gas bill. This was due to the enactment of the Decree of the Minister of Energy and Mineral Resources (Kepmen ESDM) from January 1, 2025, which means that PGAS must return part of the industrial gas bill for January-February 2025.

"PGAS provides two prices to national glass manufacturers, namely US$9.16 per MMBTU for gas from pipelines and US$16.77 per MMBTU for regasification gas," said Yunus.

In January 2025, the volume of pipe gas consumption by glass manufacturers was limited to only 54 percent, while in February 2025 it increased to 73 percent. This has an impact on the need to return bills that have been paid at non-HGBT prices.

According to him, this return is important because the cash flow of manufacturers is starting to be burdened. The competitiveness of local glass declined in the first two months of 2025 due to the delay in the extension of the HGBT policy which was only officially extended on February 26, 2025.

"However, the extent of the impact of the delay in determining the continuation of the HGBT policy has not been indicated, because it is still very much related to the current domestic and global market situation and conditions," he concluded.