Gas Price Hike Threatens Batam Industry, Apindo Urges Swift Government Action
Friday, 30 May 2025
Batam – The industrial sector in Batam is facing a serious challenge following a sharp increase in natural gas prices, which took effect in May 2025. Chairman of the Batam chapter of the Indonesian Employers Association (Apindo), Rafky Rasid, voiced deep concern among industry players about the direct impact of the gas price hike on production costs.
“Currently, industrial gas, particularly piped gas used by companies in Batam, has seen a significant price surge—from USD 8 per MMBTU (Million Metric British Thermal Unit) to USD 16.8. That’s an increase of over 100 percent,” Rafky told Batam Pos on Friday (May 31).
According to Rafky, this dramatic rise has placed a heavy burden on businesses and is driving up production costs sharply. He warned that if the situation continues, several industrial sectors could face collapse.
“We have held meetings with PGN (Perusahaan Gas Negara) Batam, including directly with PGN management for the Sumatra region. They explained that the increase stems from depleting gas supplies from wells in Sumatra. As a result, piped gas supply is being prioritized for essential industries like PLN’s power plants and other strategic sectors,” Rafky explained.
Due to limited domestic gas supply, PGN has resorted to procuring liquefied natural gas (LNG) from central and eastern Indonesia. This LNG is then distributed via pipelines to industrial areas, including Batam.
“However, LNG prices follow international market rates. The purchasing cost alone is around USD 13 to 14 per MMBTU, so by the time it reaches industries, the price exceeds USD 16. This isn’t just happening in Batam but also in other industrial regions like Lampung, Jakarta, and West Java,” he added.
Rafky stressed that the situation is urgent and requires immediate intervention from the central government, particularly the Ministry of Energy and Mineral Resources (ESDM). Apindo Batam has also coordinated with the national Apindo office to push for solutions.
“One option we’ve proposed is for gas from the Natuna gas fields to be channeled to Sumatra, including Batam. Currently, Natuna gas is exported directly to Singapore, merely passing through Batam without being utilized locally. We want this gas to be used to support domestic industry,” he said.
Rafky noted that an initial agreement has been signed between the government and relevant stakeholders to connect Natuna gas to Sumatra. However, he warned that technical implementation will take time.
“We are urging the government to accelerate this process. There must be no further delays, as the industrial sector is already in a critical state—not just in Batam, but across national industrial centers,” he emphasized.
In addition to industrial gas, Rafky also highlighted the impact of rising gas prices on PLN’s electricity generation. The price of gas for PLN has increased from USD 5.9 to USD 7 per MMBTU, affecting the flexible electricity rates applied to industrial customers.
“If this continues unchecked, businesses will be further burdened. We urge the central government to take immediate, concrete action. Our hope is that gas prices can be restored to previous levels, primarily by increasing supply from the Natuna fields, which currently have ample reserves,” Rafky concluded.
Source: metro.batampos.co.id
