Removing Subsidies for Gasoline and Diesel Consumption in Indonesia

In November 2014, Indonesia increased gasoline prices by 31% and diesel by 36%, eventually removing gasoline subsidies and introducing a fixed-price subsidy for diesel. The reform was driven by fiscal burdens, the election of President Joko Widodo, and a decline in world oil prices. While the move generated estimated savings of USD 15.6 billion in 2015—which were reinvested in ministries, infrastructure, and regional transfers—the document notes a 'missed opportunity' to invest in sustainable energy. By early 2018, the government's commitment to price stability effectively reintroduced subsidies, with estimated costs of USD 1.7 billion for the calendar year.

• In late 2014, Indonesia implemented a significant shift in fuel pricing, increasing gasoline prices by 31 per cent and diesel by 36 per cent in mid-November, followed by the total removal of gasoline subsidies and the implementation of a 'fixed price' subsidy for diesel in December.
• The 2014 reforms resulted in estimated savings of USD 15.6 billion in 2015. These funds were used to increase budgets for ministries by USD 12 billion (including health insurance, housing, and clean water), provide USD 4.1 billion for state-owned enterprise infrastructure investments, and allocate USD 1.6 billion for regional governments and villages.
• The reform led to a reduction in fuel consumption during the first half of 2015, with gasoline use dropping by 9 per cent and diesel by 6 per cent. Additionally, vehicle trips on toll roads decreased by 10 per cent.
• Despite the initial success, the government failed to invest the new fiscal space into sustainable energy and began backsliding on price adjustments. By early 2018, the decision to keep prices stable until the end of 2019 effectively reintroduced subsidies, costing an estimated USD 1.7 billion for the year, a burden primarily borne by the state-owned oil company Pertamina.

APA

International Institute for Sustainable Development (n.d.). Removing Subsidies for Gasoline and Diesel Consumption in Indonesia. https://www.iisd.org/system/files/publications/stories-g20-indonesia-en.pdf

Chicago

International Institute for Sustainable Development. Removing Subsidies for Gasoline and Diesel Consumption in Indonesia. n.d. https://www.iisd.org/system/files/publications/stories-g20-indonesia-en.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Removing Subsidies for Gasoline and Diesel Consumption in Indonesia |url=https://www.iisd.org/system/files/publications/stories-g20-indonesia-en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndremoving, author = {{International Institute for Sustainable Development}}, title = {{Removing Subsidies for Gasoline and Diesel Consumption in Indonesia}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/stories-g20-indonesia-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }