The obligation to allocate 60 percent of natural gas production for the domestic market (DMO) is expected to increase the utilization of the glass industry to 90 percent, says the Flat and Safety Glass Association (AKLP) in a statement.
“To reach 90 percent utilization, the domestic glass industry needs expansion or new investments. Investors need certainty regarding the implementation of existing policies, including the enforcement of gas DMO for the industry,” AKLP Chairman, Yustinus Gunawan, said as quoted by Katadata.co.id on Monday, July 15, 2024.
The urgency of the DMO policy is high as three glass factories require gas supply by the end of the year. Two new glass factories starting operations this year are PT KCC Glass Indonesia in Central Java and PT Xinyi Glass Indonesia, with a total production capacity of 750 tons per day. Another factory has just completed heavy maintenance.
The DMO policy will ensure a stable gas supply for these factories, leading to optimal utilization. Yustinus suggested that the gas DMO policy for the industry be included in the revision of the Government Regulation on National Energy Policy.
Chairman of the Indonesian Chamber of Commerce and Industry, Arsjad Rasjid, also supports the DMO policy for the industry. He believes this policy will make local industrial products more competitive in regional and global markets.
“The domestic industry could perish if it cannot achieve gas price parity like similar industries abroad,” Arsjad said.
In addition to the DMO policy, industry players are pushing the government to extend the specific natural gas price policy (HGBT) at US$6 per million British Thermal Units (MMBTU), which will expire at the end of this year. The Ministry of Industry has applied for an extension of the HGBT policy.
Putu Nadi Astuti, Director of Upstream Chemical Industry at the Ministry of Industry, said that the HGBT has increased tax revenue in the manufacturing sector, investments, and job creation, particularly in the upstream chemical industry.
The investment value in the upstream chemical industry is projected to reach US$33.68 billion (Rp545.8 billion) from 2022 to 2030, spread across 14 projects nationwide.
“The Ministry of Industry will continue to coordinate with the Ministry of Energy and Mineral Resources (ESDM) to ensure that the HGBT policy is extended because its benefits are already evident,” she said.
