Bahlil Prepares LPG Substitute Gas, Potentially Cheaper!
Jakarta, CNBC Indonesia - The Ministry of Energy and Mineral Resources (ESDM) is preparing an alternative to the subsidised 3 kilogram (kg) Liquefied Petroleum Gas (LPG) through the development of Compressed Natural Gas (CNG). This is in light of the high energy subsidy burden to date.
Moreover, Bahlil emphasised that national LPG imports have reached 7 million tonnes per year. According to him, CNG will be far more economical as it is sourced directly from abundant domestic natural gas production.
He stated that the development of 3 kg CNG cylinders aims to provide a more affordable energy option for the public while strengthening energy sovereignty.
“But for the 3 kg one, we’re just about to make it. Yes, we want to, and its cost is 30-40% cheaper,” he said at the IPB Alumni Synergy for the Nation event on Saturday (2/4/2026).
The plan to develop 3 kg CNG is also driven by the large state budget allocation required for LPG subsidies each year.
Bahlil noted that the national LPG expenditure reaches Rp 137 trillion per year, of which Rp 80-87 trillion must be subsidised by the state.
“The problem is the question I always get: why don’t we produce LPG domestically? We have abundant gas. We never import gas anymore,” he stressed.
Bahlil explained that the main obstacle to domestic LPG production lies in the composition of Indonesia’s natural gas, which has low C3 and C4 content as the main raw materials for LPG. On the other hand, Indonesia’s gas reserves are dominated by C1 and C2 types, which are abundant but more suitable for conversion into pipeline gas or CNG.
“I say there is no issue; for efficiency, goodness, and public service, we will stake everything to achieve independence,” he added.
In addition to CNG, the government is also promoting coal downstreaming projects into Dimethyl Ether (DME) as another substitute for imported LPG. The project is targeted at processing low-calorie coal available in large quantities domestically into a new energy product.
“DME is the result of downstreaming low-calorie coal to convert it into an LPG substitute,” he concluded.