Japan approves Rp57.4tr energy subsidies

Tokyo - The Japanese government on Tuesday approved using ¥513.5 billion (Rp57.4 trillion) from this fiscal year’s reserve fund to continue energy bill subsidies during summer to mitigate the impact of Middle East conflicts. The subsidies will cover electricity and gas bills from July to September, when air conditioning demand rises, resulting in an average household saving of around ¥5,000 (Rp560,000). The government said the subsidies would help keep bills below last summer’s levels. ‘We are focusing on reducing the burden in August, when electricity usage peaks,’ said Economy, Trade and Industry Minister Ryosei Akazawa at a press conference, where he outlined energy-saving measures for household appliances and vehicles. For gas, the Japanese government will offer subsidies of ¥14 (Rp1,600) per cubic metre in July and September, and ¥18 (Rp2,000) in August. The subsidy programme will also ease electricity bills for small and medium-sized enterprises. Japan has periodically implemented electricity and gas subsidies in recent years, particularly during summer and winter months when cooling and heating demand rises, with the latest subsidies offered from January to March. The programme was first introduced in January 2023 in response to price hikes caused by Russia’s invasion of Ukraine and has since used a total of ¥5.6 trillion (Rp626 trillion), including the latest approved on Tuesday. To offset a loss of over ¥500 billion (Rp56 trillion) and restore the reserve fund — typically allocated for natural disasters and other emergencies — to ¥1 trillion (Rp112 trillion), the government plans to submit an additional budget of over ¥3 trillion (Rp336 trillion). Liberal Democratic Party parliamentary affairs chief Hiroshi Kajiyama said he had informed counterparts from the opposition Centrist Reform Alliance that the supplementary budget is expected to be submitted ‘around mid-next week.’ The supplementary budget will allocate reserve funds to address the impact of the Middle East situation. The funds are expected to finance a new subsidy programme to keep petrol prices at ¥170 (Rp19,000) per litre, a measure that was extended in mid-March.