PGN Supports Government in Developing Household Gas Networks to Control Subsidies

Jakarta – Perusahaan Gas Negara (PGN), as Pertamina's Gas Subholding, is optimistic about continuing its assignment to develop the Household Gas Network Program ("jargas"). As one of the National Strategic Projects, the role of jargas is to support the Government in reducing LPG subsidies, a portion of which is met through imports.

Currently, PGN manages a jargas infrastructure consisting of 820,614 Household Connections (SR) spread across 18 provinces in 74 districts and cities. This contribution is equivalent to reducing LPG subsidies by IDR 1.7 trillion.

Laode Sulaeman, Director of Infrastructure Planning and Development at the Ministry of Energy and Mineral Resources (ESDM), revealed that national LPG consumption reached 8.05 million metric tons (MT) in 2023 and is projected to be 8.03 million MT in 2024 and 8.17 million MT in 2025. The increasing consumption of LPG will add to the annual subsidy burden for LPG. Additionally, controlling consumption has become essential as more than 70% of national LPG needs are met through imports. Therefore, controlling LPG consumption by transitioning LPG consumers to jargas is critical and urgent.

"It turns out that if the community extensively uses gas through jargas, it can reduce subsidized LPG consumption and also control the burden of LPG imports," Laode said during the Kick-Off Program for City Gas Competency Development at PGN on Monday, August 5, 2024. He added that the Ministry of ESDM monitors and evaluates jargas construction achievements to date and its development over the next five years.

Furthermore, the Ministry of ESDM is coordinating with the Ministry of Home Affairs to support jargas construction policies in various regions, with the Ministry of Public Works and Housing (PUPR) to integrate jargas development with housing projects, and with the Ministry of Finance and the Ministry of State-Owned Enterprises (BUMN) on matters related to jargas subsidy mechanisms.

For PGN, jargas is a strategic project in the company's long-term plan, and its development will be carried out sustainably. PGN is also pursuing various initiatives to support the sustainability of jargas, including the City Gas Competency Development Program.

"This year, PGN is targeting 117,000 SR, God willing, it will be achieved. To meet this target, there are alternative energy mixes and internal evaluations for fieldwork. PGN also needs support from partners. The Minister's directive is that we do not work alone but must share responsibilities with partners," said PGN's Commercial Director, Ratih Esti Prihatini.

Challenges in developing jargas include economic feasibility, construction issues, customer interest, and increasing usage. However, PGN must address these challenges while aligning efforts to enhance natural gas utilization and its responsibilities as a business entity.

"PGN aims for jargas construction to serve the community's interests while supporting the company's business sustainability. PGN believes that expanding jargas can positively impact core business growth. If the goal is to deliver value to the community, the value will surely return to the company. However, it must be measured in terms of risk and business sustainability," Ratih concluded.

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