Unej Analyst States Energy Reform Must Be Undertaken Amid Crisis
Jember, East Java (ANTARA) - Economist from the University of Jember (Unej), Ciplis Gema Qori’ah, stated that energy reform to realise energy security in Indonesia must be carried out amid the global energy crisis.
“Energy reform is no longer merely a policy choice, but a necessity that cannot be delayed and requires political courage to carry out planned, coordinated, and sustainable restructuring so that Indonesia does not continue to be trapped in a recurring cycle of crises,” she said in Jember Regency, East Java, on Wednesday.
The conflict in the Middle East involving three main actors, namely Iran, the United States, and Israel, is no longer just diplomatic tension, but has developed into an uncertainty shock that directly shakes the stability of the global energy market.
“That conflict has gone beyond the speculative dimension and entered the stage of real disruption, namely attacks on Iran’s energy infrastructure and LNG facilities in the Gulf region, including Ras Laffan Industrial City, marking a new chapter where global energy production centres are now direct targets,” she explained.
According to her, this vulnerability is exacerbated by threats to the Strait of Hormuz, a distribution route that supplies around 20 million barrels per day or nearly one-fifth of the world’s oil supply.
“Disruptions to this geopolitical chokepoint create a double shock in the form of disrupted production as well as hindered distribution, resulting in a combination of price surges and potential physical energy shortages far beyond the response capacity of any domestic policy,” she said.
She stated that the government faces a fundamental policy dilemma. As a net energy importer, the rise in Brent oil prices from 92 US dollars per barrel to 113 US dollars per barrel at the end of March 2026 places the government in a complex policy trade-off, where every available option carries significant economic consequences.
“Holding energy prices through subsidies implies increased fiscal pressure, while market price adjustments risk driving inflation and reducing purchasing power,” she said.
The fiscal deficit, which reached 2.92 percent in 2025 as the highest level since the post-pandemic recovery, and surged to Rp240.1 trillion or 0.93 percent of GDP in the first quarter of 2026, reflects the high cost of choosing to maintain energy price stability in the face of public demands.
This dilemma does not stand alone, but is layered with structural weaknesses in domestic energy consumption that complicate every adjustment effort. The transportation sector, which absorbs around 52 percent of national fuel oil, with 93 percent of it used by private vehicles for economically unproductive activities.
“The government has taken various mitigation steps, from fiscal interventions of Rp90 to 100 trillion for fuel subsidies, optimising coal as a domestic supply support, accelerating clean energy infrastructure, to consumption efficiency policies such as implementing work from home for civil servants and reviewing distance learning,” she said.
She assessed that these policies have proven effective in dampening energy inflation transmission in the short term, as reflected in inflation maintained at 3.48 percent (year-on-year) in March 2026.
“Coordination between fiscal and monetary authorities is an important prerequisite for maintaining macroeconomic stability. However, such coordination will not suffice without political courage to make high-cost reform decisions,” said the lecturer from the Faculty of Economics at Unej.
Ciplis said the government is faced with a dilemma between transparency that could trigger panic and narrative management that risks eroding credibility if it does not align with reality.
In conditions of highly sensitive expectations, both approaches carry unavoidable risks.
“This series of dilemmas underscores that Indonesia’s energy security is not merely a technical policy issue, but a test of the state’s institutional capacity in managing the tension between short-term stability and long-term transformation needs,” she said.
In that position, she continued, reliance on imports, consumption inefficiency, and persistent subsidy burdens risk locking Indonesia into a fiscal-energy trap, where every global shock continues to translate into fiscal pressures and domestic economic vulnerabilities.
“Without systematic corrections, reactive response patterns will only amplify crisis costs in the future and erode transformation capacity, so energy reform must be carried out,” she said.