THE government’s decision to continue the specific natural gas price policy (HGBT) of US$6 per million British thermal unit (mmbtu) might continue to erode state revenues. The government must cover the difference between the HGBT of US$6 per mmbtu and the market price to supply cheap gas to industry.
The seven sectors receiving HGBT are fertilizer, petrochemical, oleochemical, steel, ceramic, glass, rubber gloves. Reforminer Institute founder Pri Agung Rakhmanto noted that the decline in non-tax state revenue (PNBP) from the upstream oil and gas sector due to HGBT reached IDR 29.3 trillion in 2020-2022 and in 2023 the estimated state revenue in the upstream oil and gas sector will decrease by IDR 15.6 trillion.
“If the government continues with HGBT, it means the government is more prepared for the state revenue lost from the existing gas price difference,” he told Media Indonesia, Tuesday (9/7). Pri Agung said the potential loss of state revenue would be even greater in the future depending on world oil or gas prices.
In addition, he said the issue might create negative sentiment towards the investment climate in the upstream and downstream oil and gas sectors in general. He also proposed to the government to provide fiscal incentives directly to the industry rather than granting HGBT.
“With this proposal, it is believed that it will not reduce state revenue from upstream oil and gas. The investment climate for the midstream and upstream oil and gas industry can also be healthier,” he explained. (Z-2)
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