The Indonesian Ceramic Industry Association (Asaki) says that ceramic production in the country is under threat due to disruptions in natural gas supply from PT Perusahaan Gas Negara (PGN).
Asaki chairman of Asaki, Edy Suyanto, said that disruptions in natural gas supply would impact the investment climate in Indonesia, potentially disrupting the policies.
He said that the association has received complaints from one of the world’s largest sanitary ware producers that has built production facilities in Indonesia, complementing its 70 factories worldwide.
“They even threatened to shift their new investment to India and Vietnam. PGN’s policies damage the investment climate and workers’ layoff is imminent,” Edy said on Saturday, May 4, 2024.
He expressed concerns that the reduction in PGN’s gas supply in the West Java region since early 2024 is threatening the survival of the industry.
“Starting February 2024, PGN imposed quota on gas usage, at around 60 percent-70 percent, citing supply disruptions upstream,” Edy said.
To maintain production utilization and sales of ceramics, industrialists are forced to pay more than the current Certain Gas Price (HGBT) of US$6 per MMBtu to maintain domestic and export sales. The gas price paid is US$15 per MMBtu.
Edy said that this condition resulted in a decline in the competitiveness of the industry and the inability to compete in the regional and international markets.
He cited that nationwide utilization capacity of ceramic industry production in the first quarter of 2024 was at 63 percent, down from 69 percent in 2023. This figure continues the downward trend from 78 percent in 2022.
“National utilization capacity is already down and now PGN is imposing gas usage restrictions simultaneously,” he said.
Edy argued that PGN’s policy has made it difficult for the ceramic industry to plan production and it is even forced to start reducing some production lines.
Several policies implemented by PGN have been reported to the Ministry of Energy and Mineral Resources (ESDM) to immediately find solutions.
“However, PGN instead issued new policies in the form of threats of temporary gas supply termination or discontinuation to industries if it is proven that they use gas above the AGIT provisions and daily quotas,” Edy said.
Previously, PGN applied gas volume quotas to all customers amid declining natural gas supplies from several fields on the upstream side of the contractors’ work contract (KKKS).
Corporate Secretary of PGN, Rachmat Hutama, said that the decision was taken to maintain the reliability and safety of the high-risk gas network.
“PGN strives to serve customer needs as optimally as possible, but with declining gas supply conditions, we as gas distributors on the downstream side strive to ensure that gas distribution is fair to all customers,” Rachmat said in media statement.
