2027 Electricity Subsidy Budget Rises, Non-Subsidised Tariffs to Be Adjusted
The administration of President Prabowo Subianto has drafted an electricity subsidy budget of Rp 130.1 trillion for 2027. This figure represents an increase of approximately 17.84% compared to the realisation outlook of Rp 110.4 trillion contained in the 2026 State Budget.
“The Electricity Subsidy Budget is planned at Rp130,108.8 billion, or an increase of 17.8 percent compared to the 2026 outlook,” according to the Financial Note and 2027 Draft State Budget documents.
The government stated that the increase in allocation is mainly influenced by an increase in the basic cost of providing electricity and an increase in the volume of subsidised electricity. The rise in the basic cost of provision is caused, among other things, by changes in the rupiah exchange rate against the US dollar, changes in the Indonesian Crude Price due to global geopolitical conflicts, and increased production at gas-fired power plants.
Along with the increased electricity subsidy budget for 2027, the government is implementing an electricity subsidy policy by providing subsidies to eligible customer groups. Eligible customer groups are classified into household, small business and industry, government, social, and bulk and traction categories in accordance with applicable regulations and by considering the welfare status of the community.
“Electricity subsidies for households are provided to poor and vulnerable households in accordance with the National Socio-Economic Data,” the document states.
According to the government, this policy will also be accompanied by tariff adjustments for non-subsidised customers. This policy is carried out as an effort to encourage a more efficient and equitable energy transition by considering economic, social, fiscal, and environmental aspects.
The government has affirmed its commitment to consistently reducing emissions through the use of clean and environmentally friendly energy. This is particularly pursued through the energy transition from fossil-based energy to new and renewable energy.
“This policy needs to be carried out carefully by considering various aspects, especially the condition of the electricity sector and fiscal capacity,” the government wrote in the 2027 Draft State Budget document.