Jakarta – Indonesia is conducting a thorough exercise to reform its fuel subsidy scheme, its energy minister said on Nov 4, as the new president looks to rein in subsidies that amounted to about 16 per cent of budget spending in 2023.
Mr Bahlil Lahadalia said the policy on the liquefied petroleum gas subsidy will not be changed while the government is carefully calculating details on fuel and electricity subsidies.
"For electricity and fuel subsidies, we are still doing a thorough exercise because we need to be careful," Mr Bahlil told reporters.
Indonesia currently subsidises certain types of fuel and electricity tariffs, a policy that has kept inflation low but has exposed state coffers to swings in global oil prices.
President Prabowo Subianto has plans to cut energy subsidies and will instead give cash handouts to families in need, according to his key economic adviser.
The plan is expected to save up to 200 trillion rupiah (S$16.7 billion) with well-targeted energy subsidies.
Indonesia's fuel subsidies amounted to 500 trillion rupiah in 2023.
Mr Bahlil said he aims to report the new subsidy scheme formulation to Mr Prabowo in about a week.