Proposed Restrictions on Subsidized Fuel: What's the Budget?

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Adi Ahdiat 11/07/2024 15:50 WIB

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In the 2024 State Budget, the government has allocated Rp25.8 trillion for subsidies on Specific Types of Fuel (JBT). This JBT subsidy allocation is the largest since 2020.

Budget Allocation for Subsidized Specific Fuel Oil/JBT (2020-2024)*

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Budget Allocation for Subsidized Specific Fuel Oil/JBT (2020-2024)*

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The Indonesian government is considering limiting the purchase of subsidized fuel (BBM) starting August 17, 2024.

This plan was announced by Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan.

"We hope that by August 17th, we can start reducing access for those who are not entitled to the subsidy," Luhut said, as reported by *Katadata* on Tuesday (July 9, 2024).

Luhut stated that tightening the purchase of subsidized fuel aims to save the state budget (APBN).

The 2024 APBN allocates Rp25.8 trillion for the subsidy of specific types of fuel (JBT).

This budget allocation is higher than the realization of JBT subsidy spending since 2020, as shown in the graph.

Note that the JBT subsidy is provided for solar and kerosene, not Pertalite.

Although Pertalite is commonly referred to as "subsidized fuel," in government administration, Pertalite is categorized as a special assignment fuel type (JBKP) that does not receive a "subsidy" but a "compensation."

According to information on the Ministry of Finance website, "subsidies" are paid by the government to businesses monthly, based on the realized volume of fuel distribution to the public.

Meanwhile, "compensation" is paid by the government to businesses at once or in stages, to compensate for the shortfall in business revenue resulting from the government's fuel pricing policy.

In practice, both subsidies and compensation make fuel cheaper for consumers.

However, Luhut has not made a clear statement on whether the restrictions will apply to JBT (solar and kerosene), JBKP (Pertalite), or both.

This plan is also uncertain and was even denied by Coordinating Minister for the Economy Airlangga Hartarto.

"There are no restrictions; what was discussed yesterday was the reduction of sulfur content in fuel. Of course, we have to look at Jakarta's air quality, which is worrying for health. The government will certainly prepare these measures," said Airlangga, as reported by *CNBC Indonesia* on Thursday (July 11, 2024).

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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