INDONESIA ENERGY SUBSIDY NEWS BRIEFING

The document details the Indonesian government's management of energy subsidies across LPG, electricity, and liquid fuels, noting a trend of increasing budget allocations due to delayed reforms and external price pressures. It highlights the transition to targeted subsidies using poverty databases and smart cards, the implementation of the 'One Price Policy' to ensure fuel affordability in remote areas, and the long-term financial implications of capacity payments for coal-fired power plants.

• The Indonesian government increased its energy subsidy allocation in the 2017 state budget revision, with parliament approving a total of IDR 94.52 trillion for fuel and electricity subsidies. This increase was driven by rising crude oil prices, a weakening rupiah, and the decision to maintain domestic subsidized fuel prices through 2017.
• LPG subsidies have grown significantly as the government promoted LPG to replace subsidized kerosene, with the subsidy burden rising from IDR 3.89 trillion in 2008 to IDR 24.94 trillion in 2016. To address this, the government is developing a new subsidy scheme for 2018 that will use smart card technology and the Unified Poverty Database for better targeting.
• Electricity subsidy reforms involved a gradual tariff adjustment for the 900 VA consumer class, splitting it into a subsidized rate of IDR 605/kWh for poor households and a non-subsidized rate of IDR 1,352/kWh for non-poor households. However, the government halted the implementation of tariff adjustments for the 450 VA class in 2017.
• The 'One Price Policy' (BBM Satu Harga), launched on January 1, 2017, aims to provide fuel access in 148 target districts, specifically remote and border locations, at prices similar to developed regions. PT Pertamina, the sole supplier, reported a loss of IDR 5 trillion since October 2016 due to the higher logistic costs and distributor profit margins associated with the project.
• Indonesia's plan to add 24 GW of coal-fired power generation between 2017 and 2026 utilizes a 'capacity payment' mechanism where PT PLN pays for available produced capacity. This is estimated to cost USD 76 billion over a 25-year PPA, with USD 16.2 billion potentially spent on idle capacity in the Java-Bali grid between 2017 and 2026.

APA

International Institute for Sustainable Development (2018). INDONESIA ENERGY SUBSIDY NEWS BRIEFING. https://www.iisd.org/system/files/publications/gsi-indonesia-news-briefing-january-2018-en.pdf

Chicago

International Institute for Sustainable Development. INDONESIA ENERGY SUBSIDY NEWS BRIEFING. 2018. https://www.iisd.org/system/files/publications/gsi-indonesia-news-briefing-january-2018-en.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=INDONESIA ENERGY SUBSIDY NEWS BRIEFING |date=January 2018 |url=https://www.iisd.org/system/files/publications/gsi-indonesia-news-briefing-january-2018-en.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2018indonesia, author = {{International Institute for Sustainable Development}}, title = {{INDONESIA ENERGY SUBSIDY NEWS BRIEFING}}, institution = {International Institute for Sustainable Development}, year = {2018}, month = jan, url = {https://www.iisd.org/system/files/publications/gsi-indonesia-news-briefing-january-2018-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }