Groups warn gas curbs threaten output and jobs

By the Editorial Team · Friday, September 25, 2026

Indonesia's state-owned gas company PGN has reduced natural gas deliveries to industrial users to about 78-80% of contracted volumes, disrupting manufacturing operations and raising production costs. These supply cuts, driven by new regulatory pricing adjustments, risk forcing layoffs and production shutdowns in energy-dependent sectors like ceramics and glass if deliveries do not improve soon.

Industry representatives in Indonesia have raised alarms over supply restrictions on natural gas deliveries imposed by state-owned Perusahaan Gas Negara (PGN), warning that the cuts are disrupting manufacturing operations, increasing energy costs, and putting jobs at risk.

Between September 1 and September 13, companies reportedly received about 80% of their contracted natural gas volumes, with deliveries from September 14 through the end of the month reduced further to roughly 78% of the minimum agreed amounts, according to the Natural Gas Users Industry Forum (FIPGB). The restrictions come amid regulatory adjustments to gas allocations under the government’s Specific Natural Gas Price (HGBT) scheme.

Energy and Mineral Resources Ministerial Decree No. 281 K/2026 was issued to realign the distribution of natural gas volumes at subsidized rates, ensuring that PGN supplies contracted quantities at a rate of approximately US$7 per million British thermal units (MMBtu). Despite this, FIPGB chairman Yustinus Gunawan said many industries are still not receiving their full allocations. The resulting shortfall forces firms to procure additional gas at market rates, which can reach up to US$15.6 per MMBtu, substantially increasing operational expenses.

Gunawan highlighted that the supply constraints have triggered a cascading impact across various sectors, some of which have had to scale back smelting activities, halt production lines temporarily, and furlough workers. Industries such as glass, ceramics, and silicates are especially vulnerable because their furnaces demand continuous operation, and unplanned shutdowns can damage costly production equipment.

“The decline in natural gas supply has had a chain effect that is severely hurting industries,” Gunawan said. He warned that unless gas supplies improve by the end of September, layoffs could become imminent.

Similarly, Edy Suyanto, chairman of the Indonesian Ceramic Industry Association (Asaki), underscored the critical role of natural gas in ceramic manufacturing, particularly for operations involving spray dryers and kilns. He reported that several ceramic producers have cut output by between 40% and 50% due to insufficient gas availability. During the latter half of September, some Asaki members experienced daily gas quotas limited to approximately 78% of their minimum volumes.

As a consequence, five to six ceramic companies have already curbed production, and the association anticipates that prolonged restrictions might lead to workforce reductions. Partial production halts are planned from September 26 to 27, pending approval from the upstream oil and gas regulator SKK Migas, with additional shutdowns scheduled for October 1 to October 14.

Industries have also pointed to additional cost pressures from a weakening Indonesian rupiah and the increased reliance on pricier liquefied natural gas supplies to compensate for domestic shortfalls. The supply limitations have thus triggered concerns over the broader industrial landscape and employment stability in key manufacturing sectors.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.