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View all search resultsLPG subsidy surge tests targeting, import curb pledge
Analysts stress that better-targeted LPG subsidies could free up fiscal space to channel more funding into the CNG program.
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A motorized tricycle taxi running on compressed natural gas (CNG) conveys a passenger on Jl. Kyai Haji Moh. Syafi'i Hadzami in South Jakarta on Dec. 20, 2023. (JP/Nur Janti)
T
he government has significantly ramped up spending on fuel and liquefied petroleum gas (LPG) subsidies in next year’s state budget draft, raising questions over whether its efforts to curb costly LPG imports will slow down.
Analysts, however, said the bigger subsidy bill does not necessarily signal a retreat from the government’s push to reduce LPG imports, including through the development of compressed natural gas (CNG) as an alternative. Still, they stressed that better-targeted LPG subsidies could free up fiscal space to channel more funding into the CNG program.
The government has proposed a subsidy budget of Rp 142.84 trillion (US$8 billion) for “specific fuel types” and 3-kilogram LPG cylinders in the 2027 draft state budget, marking a 22.2 percent increase from the 2026 outlook of Rp 116.85 trillion.
It also factors in a fixed subsidy of Rp 1,000 per liter for automotive diesel fuel, with volumes set at 19.56 million kiloliters for diesel and 539,000 kiloliters for kerosene.
The subsidy for 3-kg LPG cylinders is pegged at Rp 114.1 trillion, up roughly 26 percent from the 2026 outlook of Rp 90.4 trillion.
While this surge coincides with the slated launch of the CNG conversion program, experts said that the initiative is unlikely to be a significant factor in reducing LPG imports or subsidy volumes in the near term.
“The CNG program is not mature enough to be hailed as one of the significant ways Indonesia could reduce 3-kg LPG imports,” Ahmad Zuhdi Dwi Kusuma, an associate principal at the Energy Shift Institute (ESI), told The Jakarta Post on Friday.
