Indonesia’s Fuel and LPG Subsidies Surge 266% to Rp 118.7 Trillion

Indonesia’s Ministry of Finance has reported that spending on fuel and liquefied petroleum gas (LPG) subsidies and compensation reached Rp 118.7 trillion through March 2026. This figure represents a 266% increase in expenditures compared to previous periods, according to reports from CNBC Indonesia and detikFinance.

The sharp rise in spending has prompted the Indonesian government to conduct a review of its energy subsidy framework. Officials are assessing the current allocation to ensure the stability of the national economy in the face of escalating costs.

Budgetary Impact and Review

The Ministry of Finance, known as Kemenkeu, identified the surge in costs as a significant pressure point for the state budget. The 266% spike in subsidies and compensation for BBM (fuel) and LPG indicates a substantial deviation from initial fiscal projections.

In response to the budget expansion, the government is reviewing energy subsidies to maintain national economic stability. This evaluation focuses on the sustainability of the current subsidy model and the potential for policy adjustments to prevent further budgetary volatility.

Energy Supply and Global Context

Despite the financial strain on the state budget, energy officials maintain that the physical supply of fuel remains secure. Purbaya stated that Indonesia’s fuel supplies are currently safe from the effects of the global oil crisis.

This sentiment was echoed by Pertamina Jatimbalinus, which affirmed that energy stocks are secure. The company stated that global conflicts have not disrupted the supply chain for the region.

The divergence between rising costs and stable supplies suggests that the budgetary pressure is driven more by pricing mechanisms, volume increases, or currency fluctuations rather than a shortage of available energy resources.

Factors Influencing Expenditure

The increase in spending is attributed to several intersecting factors affecting the energy market:

• Rising global oil prices affecting the cost of imports.
• An increase in the volume of fuel and LPG consumption.
• The continued distribution of subsidized LPG, particularly the 3kg cylinders.

The government’s review is expected to address how these factors contribute to the Rp 118.7 trillion total and whether the current distribution method for subsidies is reaching the intended target populations efficiently.