2013-2017, Subsidized Fuel Consumption Decreased

At the beginning of President Joko Widodo and Vice President Jusuf Kalla's administration, an unpopular policy was implemented: raising the price of subsidized fuel (BBM). The reason cited was that the fuel subsidy was misdirected, benefiting affluent citizens and placing a heavy burden on the state budget. The savings from the reduction in fuel subsidies were reallocated to more productive sectors such as infrastructure development, education, and healthcare.

This policy proved effective in reducing subsidized fuel consumption. The 2018 State Budget (RAPBN) shows that subsidized fuel consumption in 2013 reached 46.3 million kiloliters (kl), comprising 29.3 million kl of premium gasoline, 15.9 million kl of diesel, and 1.1 million kl of kerosene. However, by 2016, this had decreased by more than 61 percent to only 18 million kl. This decrease was a result of the removal of subsidies for premium gasoline. Subsequently, subsidized fuel consumption further decreased to 16.2 million kl in 2016. In 2017, subsidized fuel consumption was projected to reach 16.7 million kl.

The decrease in subsidized fuel consumption led to a 40.7 percent average annual reduction in the realization of fuel and 3 kg LPG subsidies, reaching Rp 43.7 trillion in 2016 from Rp 210 trillion in 2013. However, in 2017, the budget for fuel and LPG subsidies increased to Rp 44.5 trillion due to changes in macroeconomic parameters and assumptions, as well as delays in the disbursement of LPG subsidies.