Indonesia Remains Hostage to Hundreds of Trillion Energy Subsidy

energy subsidy
Summary

  • Indonesia has raised fuel prices by about 30 percent, but the decision is not a stop button to the ballooning energy subsidized budget. The figure might surpass Rp 600 trillion or one-fifth of this year's state budget.
  • The increase in energy subsidies cannot be simply narrated as the impact of the government's "pandemic wise" policy. The case is that subsidized-energy distribution problems have been lingering for years, waiting to be resolved.
  • The Indonesian Government is ready to issue a regulation to control fuel consumption, and continue to open up the possibility for Pertamina to buy cheap Russian oil.
  • The prospect of oil and gas lifting is worrying because investment in upstream oil and gas is still low. The transition to electric vehicles could be a way to create a better energy subsidy posture.

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