Report

An Input to Indonesian Fuel Price System Reforms

A review of international experiences with fuel pricing systems

This paper reviews international experience to compare how other countries have dealt with the economic and political challenge of fuel pricing, and to identify what lessons this might provide for strengthening and maintaining Indonesia’s new pricing mechanism and helping consumers cope with price volatility.

By Christopher Beaton, Lasse Toft Christensen, Lucky Lontoh on March 1, 2015

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This study looks at the fuel pricing arrangements of different countries around the world in order to provide Indonesia with information that may help inform the development of its own domestic pricing policy, particularly with an eye toward strengthening and enforcing the new pricing mechanism introduced in 2015 at the same time as identifying measures to safeguard consumers from the impacts of fuel price volatility and potential high future fuel prices.

The study’s objectives are as follows:

To set out the baseline for understanding Indonesia’s current pricing system, previous experiences with non-ad hoc pricing and possible legal constraints around market energy pricing.
To summarize existing knowledge about international pricing systems in a format that is targeted at the current needs of Indonesian policy-makers.
To identify policy options for Indonesia to consider based on international experience.