A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN INDONESIA

This guide, produced by the International Institute for Sustainable Development's Global Subsidies Initiative and the Institute for Essential Services Reform, examines the costs and benefits of energy subsidies in Indonesia. It details the mechanisms of subsidies for fuel, electricity, coal, and LPG, arguing that these measures primarily benefit wealthier citizens while creating fiscal vulnerabilities, discouraging clean energy investment, and encouraging illegal activities like smuggling.

• Subsidies create significant fiscal risks and economic distortions. Because Indonesia is a net fuel importer, large subsidies make the national fiscal position highly vulnerable to global energy price volatility. Furthermore, the price gap between subsidized and non-subsidized fuels encourages consumers to switch from 'Pertamax' to 'Premium' fuel, increasing the need for imports.
• Energy subsidies negatively impact the environment and the transition to clean energy. They discourage energy efficiency and innovation in renewables, leading to higher greenhouse gas emissions. It is estimated that removing fuel and electricity subsidies could reduce national CO2 emissions by 6.66% by 2020.
• The government has attempted various reform strategies, including the Cash Transfer Assistance program (Bantuan Langsung Tunai or BLT) in 2005 and 2008 to support poor families during price increases. Other measures include a kerosene-to-LPG conversion program and plans to move from an open to a closed distribution system for 3kg LPG canisters by 2014.

APA

International Institute for Sustainable Development (n.d.). A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN INDONESIA. https://www.iisd.org/gsi/sites/default/files/indonesia_czguide_eng.pdf

Chicago

International Institute for Sustainable Development. A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN INDONESIA. n.d. https://www.iisd.org/gsi/sites/default/files/indonesia_czguide_eng.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN INDONESIA |url=https://www.iisd.org/gsi/sites/default/files/indonesia_czguide_eng.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndcitizens, author = {{International Institute for Sustainable Development}}, title = {{A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN INDONESIA}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/gsi/sites/default/files/indonesia_czguide_eng.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }