Indonesia discusses fuel subsidy reforms and energy revenue targets

Indonesian Energy and Mineral Resources Minister Bahlil Lahadalia and Finance Minister Purbaya Yudhi Sadewa met to discuss fuel subsidy reforms and state revenue. The officials are exploring mechanisms to ensure fuel subsidies, specifically for Pertalite, are targeted more accurately. One proposed measure involves restricting subsidies for high-income individuals in deciles 9 and 10, requiring them to purchase non-subsidized fuel.

Minister Bahlil expressed optimism that non-tax state revenue (PNBP) from the mineral, coal, oil, and gas sectors will exceed the 2026 target of Rp 136.18 trillion. As of July, the sector had reached Rp 96.26 trillion. The government is also preparing to trial 3 kg Compressed Natural Gas (CNG) as a more cost-effective alternative to 3 kg Liquefied Petroleum Gas (LPG), with officials claiming CNG subsidies could be 30% to 40% more efficient.

These efforts aim to secure the state budget (APBN) amidst global oil price volatility and ensure that hundreds of trillions of rupiah in subsidies reach eligible citizens.