Indonesia Government Decides to Continue LPG Subsidies
Energy and Mineral Resources Minister Bahlil Lahadalia stated that one of the government’s considerations for not adjusting the LPG subsidy scheme is the high consumption of this energy commodity by households and micro, small, and medium enterprises (MSMEs).
“We have decided and will propose to the President that no corrections be made to LPG. This means that the current LPG scheme will remain in place as it is related to MSMEs and housewives,” said Bahlil in a press conference at the Ministry of ESDM on Monday (4/11).
Unlike LPG, Bahlil confirmed that there will be changes to the subsidy scheme for fuel and electricity. Based on discussions, the subsidy scheme for these two energy commodities will be changed to a direct cash assistance (BLT) scheme.
“This scheme is increasingly strengthening as an option that the government will take in efforts to reform energy subsidy governance,” explained Bahlil.
The BLT scheme as a replacement for the fuel and electricity subsidy scheme has been discussed with other ministries and institutions through a meeting held on Monday (4/11).
“BLT is one of the options that will be decided on at the right time. So far, the option is more focused on that,” said Bahlil.
However, Bahlil continued, in the next few times, a number of trials will still be carried out to determine the appropriate formula.
“We are still conducting in-depth exercises because we must be careful. This is done while waiting for in-depth reports from our friends at Pertamina, BPH Migas, and PLN,” explained Bahlil.
Bahlil emphasized that the change in the subsidy scheme aims to ensure that energy subsidies can truly be enjoyed by the less able. From ESDM’s assessment, the distribution of energy subsidies that is not on target reaches Rp 100 trillion per year.
This figure is equivalent to 20%-30% of the total allocation of energy subsidies, which reached Rp 435 trillion in 2024. “Hopefully, with this change in scheme, it will be more targeted,” he said.
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