Iran-US-Israel Conflict Spurs Push to Accelerate Indonesia's Electrification
JAKARTA – Geopolitical tensions in the Gulf region between Iran, the United States, and Israel are not only sparking global concerns but also opening opportunities for Indonesia to accelerate major steps in the energy sector, particularly electrification.
Constitutional Economist Defiyan Cori assesses that the conflict situation could serve as a momentum for the government to expand electricity-based energy policies while reducing dependence on imported fossil fuel imports.
“The war in the Gulf region has the potential to disrupt global energy distribution routes, especially through the Strait of Hormuz, which is one of the world’s main oil shipping lanes. Disruptions on that route are feared to impact Indonesia’s energy supply, which still relies on oil and gas imports,” he stated in a written release on Wednesday (1/4/2026).
According to Defiyan, this condition poses a serious challenge for the government in maintaining national energy resilience, especially amid the energy self-sufficiency target set by President Prabowo Subianto.
Burden of Energy Subsidies Continues to Swell
Data shows that Indonesia’s energy subsidy allocations have continuously increased in recent years. In 2021, energy subsidies were recorded at Rp 131.5 trillion, up from Rp 95.7 trillion in 2020.
In 2022, the realisation of energy subsidies rose to Rp 157.6 trillion, then increased again to Rp 159.6 trillion in 2023, with the largest portion used for subsidies on imported fuel oil (BBM) and 3 kg LPG.
In 2024, the energy subsidy allocation reached Rp 203.4 trillion, with Rp 114 trillion of that for BBM and 3 kg LPG subsidies.
“In the 2026 RAPBN, the government has again allocated energy subsidies of Rp 210.06 trillion, including Rp 105.4 trillion for BBM and LPG subsidies,” he added.
Push to Shift Subsidies to Electrification
Defiyan assesses that the large allocation of fossil-based energy subsidies needs to be evaluated, especially amid rising global geopolitical risks.
He urges the government to begin shifting some subsidies from imported BBM and LPG to electrification programmes, such as electric stoves and electric vehicles, to strengthen national energy resilience.
As a note, President Prabowo Subianto has previously expressed commitment to accelerating the transition to new and renewable energy through the national electrification programme, including the construction of a 100 gigawatt Solar Power Plant.
The programme is also aimed at increasing the electrification ratio in remote areas and supporting the development of the electric vehicle ecosystem.
Defiyan stated that electrification policies need to be supported by changes in subsidy patterns so as not to merely become a short-term response to geopolitical conflicts.
He also suggested expanding electrification incentives for the public, particularly low-income groups, to make the transition process faster.
“In addition, the government needs to carry out pilot projects in several regions to accelerate the migration of energy use from BBM and LPG to electricity. Socialisation and education for the public are also deemed important to increase acceptance of electricity use,” he concluded.