Japan to earmark Rp55.5 trillion for this year's summer subsidies

Japan is considering allocating around 500 billion yen, or about Rp55.5 trillion, from a reserve fund to subsidise household electricity and gas bills during the peak summer demand period. A source told Reuters on Thursday (21 May) that the government is preparing larger subsidies per household than during July–September last year. The move comes as the de facto blockade of the Strait of Hormuz amid the Middle East crisis is expected to push up electricity and gas prices in Japan, which has limited energy resources. The step followed Prime Minister Sanae Takaichi’s on Monday instructing the Liberal Democratic Party (LDP) and its junior coalition partner, the Japan Innovation Party, to develop detailed steps of support related to electricity and gas bills. The policy aims to keep utility costs below last summer’s level. Summer in Japan typically raises demand for air conditioning. Last summer, the burden of electricity and gas bills per household fell by about 1,000 yen per month. At that time, the government used around 288.1 billion yen from the fiscal 2025 reserve. Electricity and gas subsidies in Japan have been implemented periodically in recent years, especially in summer and winter when demand for cooling and heating increases. The programme was first introduced in January 2023 in response to price increases caused by Russia’s invasion of Ukraine.