Government Prepares to Overhaul 3 kg LPG Subsidy Distribution Scheme in 2027
The government plans to issue several policies related to controlling energy subsidies, particularly for 3 kg LPG, in 2027. This is intended to make energy subsidy distribution more targeted.
Based on the 2027 State Budget Financial Note, the government plans to transform the distribution of 3 kg LPG subsidies to be more targeted and to evaluate the retail selling price of 3 kg LPG in line with economic conditions and public purchasing power.
“The government will also transform the 3 kg LPG subsidy policy from a commodity-based subsidy to a beneficiary-based subsidy,” the 2027 State Budget Financial Note stated.
The government noted that efforts to implement the LPG subsidy transformation policy include preparing a database used as a reference for distributing 3 kg LPG, such as developing consumer data collection features based on the Population Identification Number, matching data with the Targeting for the Acceleration of Extreme Poverty Elimination data, and preparing 3 kg LPG distribution infrastructure.
In line with this, starting January 2024, purchases of 3 kg LPG at distribution bases can only be made by users who have been registered in a web-based system and/or application.
“Thus, 3 kg LPG users can be registered to support Indonesia’s readiness towards equitable 3 kg LPG distribution,” the document stated.
Efforts to control subsidies are also driven by energy subsidies that continue to swell each year, including an expected surge in subsidies next year.
Based on data from the 2027 State Budget Financial Note, energy subsidies in 2026 are estimated to reach Rp 227.3 trillion, up 19.6% from energy subsidies in 2025 which were recorded at Rp 185.2 trillion, and also higher than 2024’s Rp 177.6 trillion.
In fact, energy subsidies in 2027 are estimated to jump again to Rp 272.9 trillion.
Of the estimated energy subsidies of Rp 227.3 trillion in 2026, 3 kg LPG subsidies are estimated to reach Rp 90.4 trillion. In 2027, 3 kg LPG subsidies are even estimated to rise further to Rp 114.1 trillion.
The subsidy policy in 2027 is directed to “continue efforts to transform the 3 kg LPG subsidy to be targeted, becoming beneficiary-based and integrated with accurate beneficiary data.”
The policy includes collecting data on 3 kg LPG users based on technology so that 3 kg LPG users are those who have been registered and listed in the National Socio-Economic Data.
“The implementation of this transformation is carried out in stages by considering data readiness, infrastructure, and the economic and social conditions of the community,” the document added.
The budget calculation for 3 kg LPG subsidies in the 2027 State Budget uses an assumed volume of 8.94 million metric tons of 3 kg LPG. This means there is an increase from the 3 kg LPG quota in 2026 which was set at 8 million metric tons.
In line with this policy, the Ministry of Energy and Mineral Resources also plans to tighten the distribution of 3 kg LPG by limiting the groups of people who can buy subsidised LPG based on welfare deciles.
Director General of Oil and Gas at the Ministry of Energy and Mineral Resources Laode Sulaeman said the policy is needed so that 3 kg LPG distribution is more targeted. The government is currently discussing the application of welfare data or deciles to determine which groups are entitled to receive LPG subsidies.
“So, now we are intensifying conversion. Conversion, then the class that receives it is regulated to be more targeted. The deciles will later be regulated for LPG. Not only for fuel,” Laode said at the House of Representatives building.
According to him, his office will also discuss the use of the data with Statistics Indonesia and PT Pertamina. The discussion is a follow-up to a meeting between the Minister of Energy and Mineral Resources and the Minister of Finance some time ago.
“That is one of the things we will discuss with BPS, Pertamina, in implementing the results of the meeting between the Minister of Energy and Mineral Resources and the Minister of Finance,” he said.
Previously, PT Pertamina Patra Niaga and the Directorate General of Population and Civil Registration of the Ministry of Home Affairs signed a cooperation agreement on granting access rights and utilisation of population data in services within the scope of PT Pertamina Patra Niaga.
The cooperation is expected to strengthen the verification and validation process of data to support more targeted distribution of subsidised energy. The agreement also supports the implementation of Minister of Energy and Mineral Resources Decree Number 37 of 2023 concerning Technical Guidelines for the Transformation of Targeted LPG Subsidies, as well as serving as the basis for system integration that has been prepared by Pertamina Patra Niaga for NIK validation in 3 kg LPG distribution.