Energy Minister Proposes Diesel and Electricity Subsidies for RAPBN 2022

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 187.Pers/04/SJI/2021

Date: 3 June 2021

Energy Minister Proposes Diesel and Electricity Subsidies for RAPBN 2022

In a Working Meeting with Commission VII of the House of Representatives of the Republic of Indonesia (DPR RI), Minister of Energy and Mineral Resources (EMR), Arifin Tasrif, proposed macro assumptions for State Budget Plan (Rancangan Anggaran Pendapatan dan Belanja Negara, RAPBN) for Fiscal Year 2022, including Solar diesel and electricity subsidies.

Arifin proposed a Solar diesel subsidy of Rp500 per liter in the 2022 RAPBN. This value is the same with the subsidy value in fiscal year 2021.

"In the context of efficiency and to ensure that diesel oil subsidies are on target, it is necessary to increase the role of directly related entities and local governments in controlling and supervising the consumption of subsidized fuels through digitalization program and/or field supervision," said Arifin at the DPR Building on Wednesday (2/6).

Meanwhile, electricity subsidies are proposed at Rp61.83 trillion, assuming rupiah exchange rate of Rp14,450 per US dollar, ICP USD60 per barrel, and inflation rate of 3 percent. However, referring to the recommendations of the Corruption Eradication Commission (KPK) and the Development Finance Comptroller (BPKP), the total electricity subsidies for 2022 can be reduced to Rp39.50 trillion if 450 VA customers who are not in the DTKS (Integrated Social Welfare Database) are separated.

Arifin explained that the electricity subsidies in the 2021 APBN (State Budget) are allocated at Rp59.26 trillion. The realized electricity subsidies, which consist of pure subsidies and electricity tariff discounts, amounted to Rp22.10 trillion until April 2021. Meanwhile, the outlook for 2021 is Rp59.26 trillion, assuming rupiah exchange rate of Rp14,600 per US Dollar, ICP USD45 per barrel, electricity generation cost (Biaya Pokok Penyediaan, BPP) 1,334.44 per kWh, and electricity sales 266.47 TWh (subsidized and non-subsidized).

"The outlook includes Rp5.57 trillion discounts for 450 VA consumers and 900 VA poor households for January--June 2021, and Rp101.79 billion discounts for 450 VA business and industrial consumers for January--June 2021," added Arif.

On that occasion, Arifin also proposed electricity policies for 2022, among others, by providing subsidies for eligible groups only. Subsidies are given to poor and underprivileged household consumers with 450 VA and 900 VA plans according to the DTKS through a direct subsidy mechanism.

"Other policies include improving electricity services, increasing the efficiency of electricity supply by reducing the composition of oil fuels use in power plants, and encouraging the development of more efficient new, renewable energy," Arifin concluded. (IY)

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