The objective of the GoI to regulate an affordable natural gas price through MEMR Regulation No. 8/2020 undoubtedly benefit the industrial sector. However, the regulation should be carefully implemented and monitored to prevent revenue loss in the natural gas business entities and avoid underperforming gas users/industries.
The study finds three main issues in implementing the new regulated natural gas price. First, the compensation limit for the upstream natural gas entities is problematic for KKKS, whose annual loss is higher than the annual government take. Second, a detailed incentive mechanism for natural gas transmission and distribution companies is unavailable. And third, the evaluation scheme on the industry’s performance remains unclear.
Keywords: natural gas, Indonesia, energy investment, industry, natural gas price
