Indonesia Prepares Three Measures to Curb Fuel and LPG Subsidies, Including Volume Control

The government of President Prabowo Subianto has prepared three main measures in the direction of energy subsidy policy for 2027. In essence, subsidies and compensation are directed to be more targeted, particularly towards poor and vulnerable communities.

Citing the 2027 State Budget Draft (RAPBN) Financial Note, based on policy evaluations from 2022 to 2026, the direction of energy subsidy policy in 2027 is focused on three matters.

First, continuing the provision of fixed subsidies for diesel fuel and price-gap subsidies for kerosene. This is accompanied by volume control and supervision of the groups entitled to utilise them, the document stated.

Second, continuing efforts to transform the 3 kg LPG cylinder subsidy so that it is properly targeted, becoming beneficiary-based and integrated with the National Socio-Economic Data Registry (DTSEN). This will be carried out in stages, taking into account data readiness, infrastructure, and the economic and social conditions of the community.

Third, electricity subsidies are provided to poor and vulnerable households in accordance with DTSEN, accompanied by tariff adjustments for non-subsidised customers.

This is in line with the PRO-KESRA Integrated Social Assistance Programme, which targets energy assistance to 87 million electricity subsidy recipient customers and 66.4 million 3 kg LPG subsidy recipient customers by 2029, the RAPBN 2027 Financial Note explained.