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Govt, lawmakers agree to hike energy subsidy spending in 2024
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Crude awakening: Motorists line up on May 11, 2022, at a gas station in Malang, East Java. The government has decided to maintain fuel subsidies, despite the skyrocketing price of crude oil.
(Antara/Ari Bowo Sucipto)
T
he House of Representative’s Budget Committee (Banggar) has agreed to bump up energy subsidy and compensation allocation to Rp 339.26 trillion (US$22.06 billion) for the 2024 budget, Rp 13.3 trillion more than what had been proposed in August.
The government plans to allocate Rp 189.10 trillion to energy subsidies, Rp 3.22 trillion higher than the initial proposal, to increase subsidies for 3-kilogram canisters of liquefied petroleum gas (LPG).
The remaining Rp 146.16 trillion will be used for compensation, a Rp 10.1 trillion increase from the initial proposal. This compensation is payable to state-owned enterprises (SOEs) in the energy sector to keep fuel and electricity prices low.
“We drafted the 2024 state budget bill with the understanding that, in the current economic situation, even newly agreed-upon legislation will undergo changes that are not easy to project,” Finance Minister Sri Mulyani told Banggar lawmakers on Tuesday.
Despite the increase in subsidies and compensation for energy sector SOEs, the 2024 spending could still fall below this year’s projected Rp 352.2 trillion and the Rp 551.2 trillion record realized last year amid soaring oil prices.
Read also: The fossil fuel subsidy hampers green energy initiatives
She cited how the Brent crude oil price has risen sharply in the past three weeks to $93 per barrel on Monday, from roughly $85 to $86 per barrel in the end of August.
