Challenges and prospects of developing city gas to reduce imported LPG in Indonesia

Abstract

Indonesia has natural gas potential that can be developed through the city gas program. Although the city gas program has been designed since 2009, its effectiveness in addressing the critical LPG issues is still insignificant. The achievement of the city gas development target in 2019 has only reached 12% of the government's target of 4.7 million SR (house connections) in 2025. We conducted content analysis and in-depth studies on several legal products and literature related to opportunities and challenges in the city gas development. We found that the main problem was the limited investment from both the government budget and the corporate budget. Challenges of city gas development are low project economics, delays in upstream natural gas projects and natural gas infrastructure development, and low customer satisfaction. Meanwhile, obstacles to city gas development are the length of the licensing process, social problems, unclear KPBU (Community - Business Entity Cooperation) scheme, and undefined handling of LPG subsidy (3 Kg). This finding is expected to be taken into consideration in the formulation of a more effective and massive city gas development strategy in the future.