Indonesia News Briefing February 2015
February 3, 2015
Indonesia Energy Subsidies Briefing February 2015 - English (PDF - 429 KB)
Briefing Subsidi Energi Indonesia Februari 2015 - Indonesia Bahasa (PDF - 407 KB)
As part of its work on energy policy and sustainable development in Indonesia, the Global Subsidies Initiative publishes a regular briefing on issues related to energy subsidies.
The February 2015 edition includes:
- On 31 December 2014, Indonesian President Joko Widodo announces the removal of subsidies on Premium gasoline and the introduction of a “fixed” subsidy on Solar diesel. Due to low world oil prices, the immediate impact of this decision is a decrease in gasoline and diesel prices on 1 January and then again on 19 January 2015. The latest figure in the proposal for the Revised State Budget shows an anticipated decline in fuel subsidy expenditure of IDR 194.2 trillion (US$ 15.5 billion).
- The government also announces a new pricing mechanism for petroleum fuel. Premium gasoline is to be sold at market prices, but the distribution costs to remote areas will continue to be subsidized. Solar diesel will be sold at IDR 1,000 below the market price. The government is to announce price changes every two to four weeks.
- It is still now known exactly how the government will propose to reallocate the savings from subsidy expenditure. Latest reports indicate plans to inject IDR 48 trillion (US$ 3.8 billion) into state-owned enterprises for infrastructural spending.
- These policy changes follow closely on gasoline and diesel price increases in November 2014. A number of new systems to provide compensation were introduced before these price increases, including a new health card and cash transfer systems that deliver funds directly to individual savings accounts.
- A number of price reforms have also taken place for 12kg-cylinder LPG and electricity tariffs.