Bahlil Reveals One Source to 'Patch' Swelling Energy Subsidies

Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia revealed that the government has prepared a number of strategies to cover the surge in energy subsidy needs, primarily due to rising global oil prices, without raising the price of subsidised fuel.

According to him, one source of additional state revenue comes from increased oil and gas income when the Indonesian Crude Price (ICP) rises. “If our ICP is USD 70 per barrel, state revenue from oil and gas is around USD 10.8 billion. If the ICP is USD 100 per barrel, state revenue becomes USD 17.6 billion. That means there is a saving of USD 7 billion from that revenue,” Bahlil said at the CNBC Indonesia Energy Forum in Jakarta on Thursday.

He detailed that with an assumed exchange rate of around Rp17,500 per US dollar, the additional revenue amounts to roughly Rp120 trillion to Rp130 trillion. However, this only covers about half of the required additional subsidy.

Therefore, his ministry is seeking other revenue sources from the mineral and coal sector. One of the steps is adjusting the royalty rates for nickel, coal, and other commodities. “I then adjusted the royalties for nickel, coal, and other commodities. From there, we got an additional Rp30 trillion to Rp35 trillion. So the total is Rp160 trillion from the ESDM sector to patch the additional subsidy without raising fuel prices,” Bahlil explained.