Finance Minister Purbaya Says Fuel Subsidy Cuts to Be Phased In

Finance Minister Purbaya Yudhi Sadewa has said that control of subsidised fuel, particularly Pertalite, will be carried out gradually and that Pertamina’s system is capable of supporting such restrictions.

“We are discussing the possible implementation of restrictions on Pertalite subsidies for the upper levels,” Purbaya said in Jakarta on Tuesday after receiving a visit from Energy and Mineral Resources Minister Bahlil Lahadalia.

He said that fuel subsidy control could be implemented by prohibiting people in the 9th and 10th deciles from purchasing Pertalite, requiring them to buy non-subsidised fuel instead.

According to him, the control of fuel subsidies is still under discussion and is expected to be implemented not long after all systems are ready.

“Perhaps those in the 9th and 10th deciles. So that a few months later we can reduce it gradually. We are studying the system,” he said.

Purbaya added that global oil prices remain volatile, so appropriate measures are needed to ensure the state budget remains secure until the end of the year.

In addition to discussing fuel subsidy control, Finance Minister Purbaya and Minister Bahlil also focused on the state budget, especially since the Energy Ministry is the largest contributor to non-tax state revenue.

“So we focused on ensuring that this year’s state budget is safe. He (the Energy Ministry) makes a large contribution to non-tax state revenue, so we discussed that. We also need to remain vigilant and ensure our state budget is secure until the end of the year,” he added.

Earlier, Energy and Mineral Resources Minister Bahlil Lahadalia met with Finance Minister Purbaya Yudhi Sadewa to discuss the distribution of fuel subsidies so that they are better targeted.

“We also discussed the subsidy pattern so that it is well targeted,” Bahlil said.

According to him, oil and gas product subsidies have not been fully well targeted so far, with even affluent people receiving subsidised fuel.

For this reason, Bahlil met with Purbaya to find a system for distributing fuel and gas products that is properly targeted, as hundreds of trillions of rupiah have been allocated for energy subsidies.