Experts: Government's Policy to Hold Pertamax Price Remains Rational
Jakarta (ANTARA) - A number of experts assess that the government has a rational policy basis for deciding not to lower the price of Pertamax, which remains at Rp16,250 per litre, even though global oil prices have begun to decline gradually.
“When Pertamax was raised to Rp16,250 last June, that price was actually still below the price implied by the formula because global fuel product prices at that time were very high,” said economist Yayan Satyakti from Padjadjaran University (Unpad) when contacted in Jakarta on Friday.
The price of the non-subsidised RON 92 fuel has not changed from the level of Rp16,250 per litre, even as PT Pertamina (Persero) announced price reductions for other non-subsidised fuels in July 2026.
He explained that a model he developed shows the decision to maintain the Pertamax price was predictable and is part of a price smoothing strategy that Pertamina has been implementing. “Pertamina absorbed losses at that time, so when oil prices fall, the margin is restored by holding the Pertamax price, not by lowering it immediately,” Yayan said.
Yayan explained that non-subsidised fuel prices do not simply follow the movements of global crude oil prices. Based on a model referencing the government’s pricing formula and Pertamina’s behaviour as a price setter, it was estimated that Pertamax would indeed be maintained. For August, he explained, the basic formula points to a price of around Rp13,700 per litre, but the smoothing approach estimates the price to be in the range of Rp16,000 per litre, or not much different from the current price.
According to Yayan, if Pertamax were immediately lowered according to the formula, the main benefit would be a reduction in inflation of about 0.4 percentage points over three months. Conversely, by maintaining the price, the benefits of the decline in global oil prices are used more to improve Pertamina’s margins, while the government’s subsidy burden for Pertalite and Solar remains the largest component in the budget.
“If Pertamax is cut to the formula, our pass-through estimate implies around a -0.4 percentage point reduction in inflation over three months (annual easing from 3.34 percent to around 2.9 percent). If it is held, the impact is nil and the entire oil price decline flows to the budget and to Pertamina’s margin recovery,” he added.
A similar view was expressed by public policy expert Kristian Widya Wicaksono from Parahyangan Catholic University (Unpar), who stated that the government’s decision not to lower the Pertamax price is justifiable as long as it is based on a comprehensive price calculation and communicated openly to the public.
“Fuel prices are not determined solely by the global crude oil price on a particular day. The government and business entities also take into account the average price over a certain period, the rupiah exchange rate, processing costs, distribution costs, taxes, and reserves to anticipate market volatility. Therefore, a decline in global oil prices does not always have to be immediately followed by a reduction in domestic selling prices,” he said.
He stressed that as a non-subsidised fuel, Pertamax is not obliged to undergo price adjustments every time global oil prices fall. The main benchmark is whether the selling price still reflects the economic cost based on the applicable formula. Kristian also reminded the government not to mix the non-subsidised fuel pricing mechanism with the need to cover state budget deficit pressures. According to him, if the main reason for holding the price is to strengthen the fiscal position, the government must explain this policy basis openly to avoid creating uncertainty and eroding public trust in energy governance.
“The success of energy policy is not only measured by whether fuel prices are cheap or expensive, but also by the government’s ability to maintain a balance between consumer interests, the sustainability of energy supply, the health of state finances, and public trust in the policy-making process,” he added.
Pertamina officially adjusted several fuel prices on Wednesday (1/7), with the price of RON 92 fuel, or Pertamax, being held by Pertamina at Rp16,250 per litre after an increase on 10 June. Meanwhile, the price of RON 98 fuel, or Pertamax Turbo, was reduced by Rp1,450 per litre to Rp19,300 per litre from the previous month’s price of Rp20,750 per litre. The price of RON 95 fuel, or Pertamax Green 95, was also maintained by Pertamina at Rp17,000 per litre.