JAKARTA, BN NASIONAL – The Downstream Oil and Gas Regulatory Agency (BPH Migas) has revealed that the current market price of subsidized diesel fuel is still far below its economic value, creating a significant subsidy burden for the government.
Head of BPH Migas, Erika Retnowati, explained that the price of subsidized diesel is currently set at IDR 6,800 per liter, while non-subsidized diesel prices have exceeded IDR 10,000 per liter. To reduce this gap, PT Pertamina (Persero), as the distributor of subsidized fuel, also receives compensation funds.
“The diesel subsidy set in the State Budget (APBN) is only IDR 1,000 per liter. With that amount, it’s impossible to cover the gap with the economic value,” Erika said during a hearing with Commission XII of the House of Representatives (DPR RI) on Monday (11/18/2024).
The Ministry of Energy and Mineral Resources (ESDM) previously proposed increasing the diesel subsidy by IDR 1,000–IDR 3,000 per liter for 2025. This proposal was conveyed by former Minister of Energy and Mineral Resources, Arifin Tasrif, during a working meeting with Commission VII of the DPR RI on Wednesday (6/5/2024).
“As of May 2024, the fixed diesel subsidy is IDR 1,000 per liter, accompanied by an additional compensation of IDR 4,496 per liter. In the 2025 State Budget Draft (RAPBN), we propose a fixed subsidy of IDR 1,000 to IDR 3,000 per liter,” Arifin explained.
Arifin emphasized that the economic value of diesel fuel is currently IDR 12,100 per liter, far above the retail price of IDR 6,800 per liter. This disparity has prompted the government to propose increasing subsidies to maintain retail price stability, particularly as diesel is widely used in various strategic sectors.
“Diesel fuel is extensively used for land, sea, and rail transport, fisheries, agriculture, micro-enterprises, and public services. Therefore, it is crucial to keep retail prices affordable,” Arifin said.
The government continues to seek solutions to balance economic value and subsidies. The proposed subsidy increase in the 2025 State Budget Draft is a strategic step to support sectors reliant on subsidized diesel fuel.
