Jakarta. Indonesia’s 2027 state budget plan does not yet include funding for the government’s proposed compressed natural gas (CNG) program aimed at reducing household reliance on subsidized liquefied petroleum gas (LPG), despite growing concerns over rising import costs.

The baseline assumptions for the 2027 draft state budget (RAPBN) maintain the subsidized LPG allocation at 8 million metric tons, unchanged from this year.

Instead, the Energy and Mineral Resources Ministry (ESDM) is focusing on expanding city gas networks and promoting electric stoves to curb consumption of 3-kilogram LPG cylinders.

Instead, the Energy and Mineral Resources Ministry (ESDM) is focusing on expanding piped natural gas networks (Jargas) and promoting electric stoves to curb the use of subsidized 3-kilogram LPG cylinders.

Under the ministry’s indicative budget ceiling, Rp 5.2 trillion ($293 million) in multi-year funding has been allocated to develop 959,232 household gas connections through 2028, while Rp 815.6 billion is earmarked for electric stove programs.

The ministry’s total indicative budget for 2027 stands at Rp 27.33 trillion. During a meeting with the House of Representatives Commission XII on Monday, lawmakers agreed that 82% of the budget, or Rp 22.48 trillion, should be directed toward programs that deliver direct benefits to the public.

Bisman Bakhtiar, executive director of the Center for Energy and Mining Law Studies (PUSHEP), said any energy substitution program should be reflected in the state budget to support infrastructure development and potential subsidy schemes.

“The absence of a dedicated allocation does not necessarily mean the CNG program has been canceled. The funding could be placed under another budget item or introduced through a budget revision mechanism,” Bisman told B-Universe on Tuesday.

The ESDM Ministry is preparing a pilot project for household CNG use by importing 100,000 three-kilogram CNG cylinders from China, citing the domestic industry’s inability to manufacture containers that meet the required specifications.

Pri Agung Rakhmanto, founder of ReforMiner Institute, said CNG could replace LPG and strengthen Indonesia’s energy security by utilizing domestic natural gas resources.

“However, the supporting infrastructure must be developed first, including gas compression facilities and distribution pipelines to end users,” Pri Agung said.

He added that expanding Jargas would require substantial state funding, as relying solely on private sector investment would depend on commercial viability and investment returns.

“The key advantage of CNG is its supply source. It can be sourced entirely from domestic gas reserves, eliminating the need for imports. But the infrastructure must be prepared,” he said.

Energy Minister Bahlil Lahadalia said the LPG-to-CNG conversion program remains in the testing phase, with the government focusing on ensuring the safety of lightweight three-kilogram CNG cylinders for household use.

“CNG cylinders weighing 12 kilograms and 20 kilograms are already used in hotels and restaurants and have proven to be more efficient. But households need lighter cylinders, which is what we are currently testing,” Bahlil said recently.

Bahlil said that Indonesia spends around Rp 140 trillion annually on LPG imports exceeding 8 million metric tons, with the burden increasing when global oil prices rise.

“There is no other way to improve efficiency except by utilizing domestic resources to replace imported LPG. We are now waiting for the results of the three-kilogram cylinder trials,” he said.

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