Luhut Suddenly Talks About Electricity Subsidy Reform, What's Happening?

National Economic Council (DEN) Chair Luhut Binsar Pandjaitan has suddenly spoken out about reforming the national electricity subsidy. The reform is considered crucial for restructuring the targeting of national energy subsidies, which are still largely enjoyed by ineligible groups. Luhut explained that the current energy subsidy burden remains above Rp 300 trillion per year. According to him, a change in the assistance scheme is needed, particularly in the electricity sector, so that the state budget can be allocated more equitably for lower-income communities. “From the data we have managed to collect, the energy subsidy burden is still above Rp 300 trillion per year. Ironically, around 62.9 percent is actually enjoyed by the well-off. This is clearly unfair and requires a retargeting of subsidies,” Luhut said in an Instagram post @luhut.pandjaitan on Tuesday (9/6/2026). Luhut himself has already conveyed the plan during a Hearing Meeting with the National Financial Accountability Agency of the Indonesian House of Representatives. He believes there needs to be a change in the subsidy pattern from commodity-based subsidies to fully individual-based direct assistance, referring to the Single National Socio-Economic Data (DTSEN). “We need to change this policy by shifting commodity-based subsidies to fully individual-based direct assistance. In line with Presidential Instruction Number 4 of 2025, we will shift the database to the Single National Socio-Economic Data so that lower-income groups are truly protected,” Luhut explained. In its implementation, the government will utilise GovTech technology encompassing a biometric verification system to close loopholes for data manipulation in the field. The use of a transparent digital system is projected to provide savings for the state treasury of up to Rp 29.9 trillion annually. “This digitalisation step is important to cut bureaucratic complexity and close data manipulation loopholes that have been a source of state losses. Through a transparent system, we can save state coffers up to Rp 29.9 trillion per year while ensuring the state budget is right on target,” he added. Currently, the trial coverage of this digital subsidy model is being expanded to 42 districts and cities before being implemented nationally. Luhut hopes that this assistance will not merely become a consumption cost, but can be used by the community as capital to build productive businesses. “What needs to be noted is that subsidy reform is not about reducing the rights of the poor, but rather ensuring every rupiah of the state budget truly reaches those entitled to it. With courage in execution, I hope this change will eventually realise social justice,” he concluded.