This is the Economic Price of Pertalite, Solar, and 3Kg LPG.

Finance Minister Sri Mulyani Indrawati stated that the government had increased the energy subsidy and compensation budget to Rp520 trillion (approximately US$34.3 billion) in 2022.

This measure was taken to prevent price increases for subsidized fuel (BBM), 3-kilogram LPG cylinders, and electricity tariffs, despite soaring global energy prices.

In a hearing with the Indonesian Regional Representative Council (DPD RI), Sri Mulyani explained the substantial subsidy budget allocated by the government to maintain the prices of Pertalite and solar fuel.

For context, the average Indonesian Crude Price (ICP) reached US$105 per barrel. The 2022 Revised State Budget (APBN-P) set the ICP at US$100 per barrel, resulting in a difference of US$5 per barrel.

Assuming an ICP of US$100 per barrel, the economic price of Pertalite (with an exchange rate of Rp14,450 per US dollar) is Rp14,450 per liter. However, Pertalite is sold at gas stations for Rp7,650 per liter. Therefore, the government must subsidize Pertamina (the state-owned oil company) by Rp6,800 per liter.

The economic price of solar fuel is Rp13,950 per liter based on the 2022 APBN outlook. However, it is sold at gas stations for only Rp5,150 per liter. This means the government must compensate Pertamina with Rp8,300 per liter.

Similarly, the economic price of a 3kg LPG cylinder is Rp18,500 per kg, but it is sold on the market for Rp4,250 per kg. This means the government provides a subsidy of Rp14,000 per kg for subsidized LPG cylinders.

(read: Indonesia's Fuel Prices Among the Cheapest in ASEAN: A Price Comparison)