During a hearing meeting with Commission XII of the Indonesian House of Representatives (DPR RI) on Monday, the ministry’s director general of electricity, Jisman P. Hutajulu, said that the subsidy will be prioritized for poor and vulnerable households.
“This step aims to encourage a more efficient and equitable energy transition by considering economic, social, physical, and environmental aspects,” he added.
In calculating the subsidy, his party made several macroeconomic parameter assumptions, including a rupiah exchange rate of Rp16,500–Rp16,900 (US$1), Indonesian crude oil (ICP) price of US$60 to US$80 per barrel, and inflation of 1.5 percent to 3.5 percent.
According to Hutajulu, 44.88 million customers, including households with 450 volt-amperes (VA) and 900 VA power, small businesses and industries, and the social sector, are targeted to receive the subsidy.
He then outlined several steps to control the burden of electricity subsidies, including managing the basic cost of electricity provision (BPP), considering that the subsidy is taken from the difference between BPP and the tariff charged to the community.
Therefore, the government has set a specific fuel consumption road map and certain exceptions for power plants to improve their efficiency and maintenance.
It is also encouraging fixing the specific natural gas price (HGBT) at US$7 per Million British Thermal Units (MMBtu) and setting the highest price for purchasing electricity from private power plants (IPP).
It is also creating a road map to reduce electricity losses during distribution, especially in the frontier, outermost, and disadvantaged (3T) areas facing technical challenges.
The domestic market obligation (DMO) policy for coal of US$70 per ton has also been implemented to reduce the cost of power plant fuel, Hutajulu stated.
The Ministry of Energy and Mineral Resources reported that most of the electricity subsidies are currently distributed to households.
Data shows that there are 24.75 million R-1/450 VA customers and 10.49 million R-1/900 VA customers who are considered poor and vulnerable out of a total of 85.40 million household customers.
According to him, the proportion of electricity subsidies for the household sector is quite large, with the figure reaching 67.49 percent in 2024 and estimated to touch 64.41 percent in 2025.
Meanwhile, the realization of electricity subsidies in 2024 reached Rp77.05 trillion (US$4.6 billion).
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Translator: Shofi Ayudiana, Resinta Sulistiyandari
Editor: Arie Novarina
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