Muhammad Aulia Rahman, Jakarta – Indonesia could be losing up to Rp 1.2 trillion ($75.5 million) monthly due to misdirected electricity subsidies, according to the National Strategy for Corruption Prevention (Stranas PK).

Pahala Nainggolan, Stranas PK coordinator, reported that the subsidies – Rp 37 trillion for 24 million 450 VA subscribers and Rp 13.4 trillion for 9 million 900 VA subscribers – are being misallocated to households that do not meet poverty criteria. Each customer receives about Rp 121,000 per month.

Stranas PK identified 10.6 million subscribers who should not be receiving subsidies, including 1.05 million 450 VA customers with multiple connections, 8.7 million 450 VA subscribers not in the Social Welfare Integrated Data (DTKS), and 866,060 900 VA customers with unregistered connections.

"We propose shifting from commodity subsidies to targeted subsidies in the form of direct cash transfers," Pahala said.

Stranas PK also called for a review of Energy Ministry Regulation No. 3 of 2024, which allows automatic shifting of non-subsidized 900 VA customers to subsidized status if they match social welfare data. They suggest the process should be application-based, with subsidy data management handled by the Ministry rather than PLN.

Three solutions

Energy and Mineral Resources Minister Bahlil Lahadalia confirmed that the government is preparing three options for more targeted distribution of fuel and electricity subsidies. These options are under review and will be discussed further.

Bahlil explained that President Prabowo Subianto has formed a special team to find more efficient ways to distribute energy subsidies. The team, led by the Energy Ministry, has already conducted two coordination meetings on the matter.

The three options proposed are:

• Converting all fuel subsidies into direct cash transfers (BLT), removing subsidies for hospitals, schools, places of worship, SMEs, and public transport.
• Maintaining fuel subsidies for transportation and public facilities to stabilize inflation, while converting most subsidies for households into BLT.
• Raising the price of subsidized fuel.

"I cannot provide further details at this stage as the discussion is still ongoing," Bahlil said recently, adding that these options are still being reviewed and have not yet been finalized. The government will report the findings to the president before presenting them to the legislature.

Source: https://jakartaglobe.id/business/misallocated-electricity-subsidies-cost-indonesia-75-million-a-mont