INDONESIA ENERGY SUBSIDY BRIEFING

The document reports that the Indonesian economy remained resilient following fuel subsidy reforms in late 2014, including a shift to a 'managed floating rate' pricing system. While these reforms improved Indonesia's credit outlook and shifted consumption toward non-subsidized fuels, the briefing warns that political intervention in pricing continues to cause financial losses for PT Pertamina and risks undermining the new system's stability.

• The Indonesian economy demonstrated resilience following major fuel subsidy policy changes, specifically a price increase in November 2014 and the introduction of a semi-automatic pricing system in December 2014.
• Reducing the price difference between subsidized and non-subsidized fuels shifted consumption patterns; subsidized gasoline consumption dropped by 7,000 kiloliters per day, while non-subsidized fuel consumption rose by 5,000 kiloliters per day.
• Standard and Poor’s upgraded Indonesia’s BB+ rating outlook from stable to positive in May 2015, citing the improved quality and predictability of government spending resulting from subsidy reforms.
• The semi-automatic pricing system is vulnerable to political intervention, with the government setting retail prices for gasoline RON 88 between IDR 200 and 750 below the calculated formula output on March 1 and March 28, 2015.
• Government price interventions have caused financial losses for the state-owned company PT Pertamina, with potential losses reaching IDR 5.6 billion per day.
• The government is pursuing broader oil and gas sector reforms, including the dissolution of the intermediary subsidiary Pertamina Energy Trading Ltd. (Petral), which reportedly generated a US$ 22 million (IDR 289 billion) benefit for PT Pertamina.

APA

International Institute for Sustainable Development (2015). INDONESIA ENERGY SUBSIDY BRIEFING. https://www.iisd.org/gsi/sites/default/files/ffs_newsbriefing_indonesia_June2015_eng.pdf

Chicago

International Institute for Sustainable Development. INDONESIA ENERGY SUBSIDY BRIEFING. 2015. https://www.iisd.org/gsi/sites/default/files/ffs_newsbriefing_indonesia_June2015_eng.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=INDONESIA ENERGY SUBSIDY BRIEFING |date=June 2015 |url=https://www.iisd.org/gsi/sites/default/files/ffs_newsbriefing_indonesia_June2015_eng.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2015indonesia, author = {{International Institute for Sustainable Development}}, title = {{INDONESIA ENERGY SUBSIDY BRIEFING}}, institution = {International Institute for Sustainable Development}, year = {2015}, month = jun, url = {https://www.iisd.org/gsi/sites/default/files/ffs_newsbriefing_indonesia_June2015_eng.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }