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Govt mulls cash transfer to replace existing energy subsidy scheme
Energy and Mineral Resources Minister Bahlil Lahadalia said that the government is currently considering two options: replacing the subsidy entirely with a direct cash transfer (BLT) for those deemed eligible, or partially reducing the subsidy alongside BLT for low-income earners.
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Energy and Mineral Resources Minister Bahlil Lahadalia waves on Oct. 25, 2024, before the Twilight Parade at Pancasila Field at the Military Academy in Magelang, Central Java. The Twilight Parade, which involved a series of debriefings for the Red and White Cabinet, was held in remembrance of the heroes who fought for Indonesia's independence. (Antara Foto/Muhammad Adimaja)
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resident Prabowo Subianto has instructed his aides to come up with a new energy subsidy scheme within the next two weeks, as the government looks to lower costly fuel and electricity spending.
Energy and Mineral Resources Minister Bahlil Lahadalia said that the government is currently considering two options: replacing the subsidy entirely with a direct cash transfer (BLT) for those deemed eligible, or partially reducing the subsidy alongside BLT for low-income earners.
“I’ll be honest here, a 20 to 30 percent fuel and electricity subsidy is not on target. That’s a big number,” Bahlil said on Sunday following a meeting with other ministries under the Office of the Coordinating Economic Minister.
Read also: Analysis: Govt plans to limit consumption of subsidized fuels, again
Bahlil went on to say that that figure is equivalent to roughly Rp 100 trillion (US$6.3 billion) from this year’s allocation of Rp 435 trillion for energy subsidies and compensation, the latter of which is payable to state-owned energy firms.
Subsidies should exclusively benefit the poor, “our brothers and sisters whose economic standing is not yet good”, not those who are well-off financially, Bahlil said.
The current scheme makes it possible for all Indonesians to benefit from fixed fuel and electricity prices, but the planned reform would allow the government to make the subsidy off-limits to certain income groups, especially those considered wealthy.
