When Imported Fuel Bills Demand the Rupiah

The government’s 2026 State Revenue and Expenditure Budget (APBN) hinges on two key assumptions: an oil price of US$70 per barrel and a rupiah exchange rate of Rp16,500 per US dollar. For a country still reliant on imported fuel, these are not mere assumptions. They are sources of pressure.

When oil prices rise, or the rupiah weakens, the impact does not stop at commodity markets. It spills over into import bills, inflation, fuel subsidies, compensations to Pertamina and PLN, and the APBN.

For many Indonesians, this does not feel like macroeconomics. What is felt is the debate over fuel prices, transportation and logistics costs, and the rupiah becoming more sensitive every time the oil market is turbulent. Behind all that lies a simple but expensive problem: too much of our economy still runs on imported fuel.

Indonesia does not lack energy. Far from it. Indonesia exports coal and LNG, and possesses vast geothermal, hydro, solar, and nickel resources. Yet the part of the economy that moves people, goods, and production still heavily depends on dollar-denominated fuel. Paradoxically, Indonesia appears energy-rich but remains fragile to oil.

Therefore, the energy transition can no longer be treated merely as a climate agenda. For Indonesia, it is also about the APBN, the rupiah, and the ability to reduce exposure to shocks beyond our control.

The Burden Entering the APBN

Indonesia allocates Rp381.3 trillion for energy subsidies and compensations in 2026. This figure is usually discussed as social protection, and partly it is. However, it also shows the cost of an economy too long tied to imported fuel.

The exposure begins outside the APBN. In 2025, Indonesia imports around US$32.77 billion worth of oil and gas. Because politically adjusting fuel prices is difficult, part of that external cost ends up borne by the state. That can be understood, but the calculation does not change: when imported fuel becomes more expensive, someone pays. In Indonesia, that someone is often the APBN.

When oil prices surge, import bills rise. When the rupiah weakens, the same fuel becomes more expensive in local currency. Coal, gas, and minerals may strengthen the balance of payments, but they do not protect an economy dependent on fuel from that pressure.

This is the hidden bill on the rupiah. It is not legislated, announced, or debated like a formal tax increase. It comes through oil prices, exchange rates, and compensation bills.

Shifting Pressure to Domestic Electricity

How long can Indonesia sustain this model? This problem is unhealthy if only managed after shocks arrive. Subsidies, delaying price adjustments, and budget revisions can provide cushioning, but they do not change the underlying structure.

The way out is not just to absorb shocks, but to reduce the entry points for those shocks. The approach is to shift demand from imported fuel to electricity generated within Indonesia’s system. If “Electrostate” has any useful meaning for Indonesia, its essence is simple: using domestic electricity to reduce fiscal pressure from imported fuel.

This does not mean all activities can be immediately electrified. Nor does it mean our electricity system is already clean. Indonesia’s power sector is still heavily reliant on coal. That cannot be ignored, and should not be justified.

However, the short-term sequence is not perfect decarbonisation overnight. The sequence is to first reduce dependence on imported fuel, then make domestic electricity cleaner over time. Every worthwhile transition—from logistics and ports to mining, industry, and public transport—reduces emissions, but also dollar demand.

Biodiesel is related to this issue. It has a role, especially when oil prices are high. However, biodiesel still places Indonesia within a combustion-based system. Electrification changes the energy medium used, and is therefore more structurally important.

The Network Determines the Outcome

Electrification changes the energy medium, but that simple sentence hides great complexity. Demand does not shift neatly from imported fuel to domestic electricity. It shifts to cables, substations, storage systems, and transmission corridors. Without grid capacity, Indonesia does not solve the bottleneck; it merely moves it.

Therefore, the electricity grid cannot be treated as a mere technical matter. Access to the grid, transmission, and storage will determine whether domestic energy can truly replace imported fuel on a large scale, or whether electrification remains a good idea stalled by weak infrastructure.

Simply put, the APBN cannot continue paying for the old fuel system while being asked to build the future electricity system. At some point, the APBN cannot simultaneously absorb oil shocks, maintain fuel affordability, compensate SOEs, and finance the next electricity system.

This is where the politics become uncomfortable. Indonesia needs clearer rules on who can build power plants, who can sell electricity, and how electricity reaches users. Private capital will not enter on a large scale if every project depends on case-by-case negotiations, uncertain permits, or unclear grid access.

This does not mean the grid should be opened recklessly. It means investment will only come if contracts are clear, risks are appropriately shared, permitting is predictable, and projects have credible revenue paths. Without that, Indonesia will continue asking the APBN to do work that the APBN can no longer do alone.

Starting from the Real Economy

There is no completely tidy path. Indonesia needs to start from where the exposure to imported fuel is already evident in the real economy.