Publications

Energy Subsidy Reform Report

Organisation: CSIS

Authors: Ardhi Rasy Wardhana Ega Kurnia Yazid Deni Friawan Sylvia Febiandita Yose Rizal Damuri
Research Themes:
Energy security
Type: Policy Reports
13 November 2024

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Energy subsidies in Indonesia are not a new phenomenon. These subsidies, particularly for Pertalite fuel, diesel fuel, and 3-kg LPG cylinders, were initially intended to maintain stable and affordable energy prices, especially for the underprivileged. However, the structure and magnitude of these subsidies have presented various challenges. First, the large allocation of energy subsidies threatens fiscal stability and long-term economic growth prospects. Second, substantial energy subsidies disrupt economic efficiency and environmental sustainability. Third, energy subsidies are often deemed ineffective in achieving  social equity and instead exacerbate social inequalities. These challenges further underline the need for a critical evaluation of the scale and management of energy subsidies.