Friday, April 19, 2024

Petrochemical megaproject at risk of stalling, GDP contribution in jeopardy

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Audina Nur




The Indonesian Olefin, Aromatic, and Plastic Industry Association (Inaplas) has warned that the petrochemical megaproject is at risk of stalling, with the national GDP contribution of Rp41 trillion (US$2.8 billion) per year could be at stake if there is no continuation of a specific natural gas price program (HGBT).

Inaplas noted that 25 member companies have utilized the HGBT facility worth $6/MMBTU, lower than the market price of $15/MMBTU. This policy effectively boosted the positive performance of the petrochemical industry during the 2020-2023 period.

Chairman of Inaplas, Suhat Miyarso, said that the certainty of natural gas supply and the continuity of HGBT are crucial to drive petrochemical investment realization as a step towards downstreaming.

“The unmet gas service could lead to the failure of petrochemical megaproject development and the risk of losing the national GDP contribution of Rp41 trillion per year,” Suhat said on Tuesday, March 2, 2024.

He revealed that the megaproject has a production capacity of 1.1 million tons of ethylene per year and can create job opportunities for 3.2 million people and add wage circulation worth Rp8.656 trillion on a national scale.

Moreover, HGBT has been able to boost the performance of petrochemicals as  reflected in a 112 percent increase in state revenue through taxes and a 4 percent increase in employment aspects. The cheap industrial gas policy also encourages increased investment interest followed by vigorous downstreaming programs in the petrochemical industry.

Statistics Indonesia (BPS) noted that the chemical and pharmaceutical sectors ranked third in terms of the largest foreign investments entering Indonesia.

“Since the implementation of the HGBT policy in 2020 until 2023, the realization of natural gas absorption in the petrochemical industry sector has shown an increasing trend of 8 percent,” Suhat said.

Furthermore, Inaplas noted that along with the increasing absorption of natural gas in the petrochemical industry sector from 2020 to 2023, company sales experienced a 15 percent upward trend, resulting in a significant increase in net profit.

“The realization of investment in the petrochemical industry sector also experienced an increase of up to 42 percent,” he added.

Therefore, Inaplas hopes that the HGBT policy outlined in Presidential Regulation No. 121/2020 on the Establishment of Natural Gas Prices can continue to drive investment realization and maintain competitiveness.

Audina Nur






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