Government Reviews Subsidised Fuel Allocation, Promotes B40 and B50 to Reduce Fossil Energy Dependence

Jakarta – The Ministry of Energy and Mineral Resources (ESDM) is considering recalculating the allocation of subsidised fuel oil as global crude oil prices fluctuate.

Deputy Energy Minister Yuliot Tanjung stated that the government is focused on strengthening national energy resilience by reducing dependence on fossil-based fuel oil.

“What we are doing is how to achieve energy resilience within the country. First, we are not only dependent on fossil-based fuel oil,” said Yuliot during a press conference opening the National Energy Sector Operations Post for the Eid al-Fitr 2026 holiday period on Thursday (12/3/2026).

One accelerated measure is the increased utilisation of biofuels through a biodiesel programme. Yuliot explained that the government is promoting the implementation of higher biodiesel blends, ranging from B40 to B50.

“We also have this alternative of increasing implementation from B40 to B50. The Minister has been tasked by the President to prepare for this. Should we face constraints, we will implement B50 as soon as possible,” he said.

Beyond biodiesel, the government is preparing ethanol-based fuel development. Ethanol trials have been conducted on high-octane petrol with a blending rate of approximately 5 per cent.

The policy will be directed towards becoming mandatory in accordance with domestic feedstock availability. “We have already tested ethanol at 5 per cent. We will later make it mandatory based on domestic feedstock availability. Perhaps later it will become mandatory at 5 per cent, 10 per cent, and by 2028 we have already planned for E20,” he said.

According to Yuliot, the decision is heavily influenced by the rapid movement of global crude oil prices. “We are monitoring the average ICP price. As long as it remains within that average, there will be no increase,” he said.

Global crude oil prices surged sharply in recent days. “We see international market prices are very volatile. From several days ago reaching 116 US dollars per barrel, then suddenly dropping again,” he said.

The government will continue to evaluate developments in global crude oil prices and ongoing energy supply contracts before making further decisions regarding fuel oil subsidies.