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View all search resultsLPG imports from US risk increasing subsidy burden
Analysts urge the government to diversify supply sources and strengthen energy security to avoid overdependence on costly routes.
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Residents line up to exchange 3-kilogram liquefied petroleum gas (LPG) canisters in Cibodas, Tangerang city, Banten, on Feb. 3, 2025. (Antara Foto/Putra M. Akbar)
I
ndonesia’s plan to import liquefied petroleum gas (LPG) from the United States under a reciprocal tariff deal could increase government subsidy costs next year, analysts warn.
Syafruddin Karimi, an economist at Andalas University, said logistics costs for long-distance supply routes such as the US are certainly higher than for imports from nearby countries in the Middle East.
“If the rupiah weakens against the dollar, the burden on subsidies will be even heavier,” he said on Monday, as quoted by Kontan.
Syafruddin urged the government to diversify supply sources and strengthen energy security to avoid overdependence on costly routes.
He added that a commitment to import US$15 billion worth of oil and gas from the US clashes with Indonesia’s long-term energy security objectives, raising questions over economic viability, strategic dependence and a lack of transparency in the negotiations.
The commitment was presented as a key outcome of a bilateral trade deal earlier this month that lowered tariffs on Indonesian goods from 32 percent to 19 percent. Under the agreement, state-owned oil and gas giant Pertamina is set to shift much of its energy procurement to US suppliers, including crude oil, LPG and other fuels.
However, the deal has raised concerns among analysts who question whether it aligns with Indonesia’s energy strategy or instead exposes the country to long-term risks.
