Energy subsidy reform is not yet on target

Researcher from the Center for Macroeconomic Policy at the Fiscal Policy Agency (BKF), Yuventus Effendi, highlighted energy subsidy reform for the effectiveness and efficiency of the State Budget in the 2022 Indef Public Discussion: Energy Crisis and Its Impact on the National Economy, virtually, Saturday (30/7). (Photo: Hartatik)

Jakarta – Researcher from the Center for Macroeconomic Policy at the Fiscal Policy Agency (BKF), Yuventus Effendi, said Saturday (30/7) that energy subsidy reform is still considered not right on target. He said that energy subsidy reform not only solves the problem of incorrect subsidy recipients, but also in normal times, energy subsidies can be reallocated to more productive expenditures.

“Transformation of subsidised 3-kg LPG cylinders, for example, to be better targeted, is integrated with basic food cards and accompanied by gradual retail sales price adjustments that are aligned with conducive economic conditions,” said Effendi when speaking virtually at Indef 2022 Public Discussion: Energy Crisis and Its Impact on the Economy National.

Currently, he said, energy subsidies are enjoyed by the rich more than the poor. In addition, there are problems related to the validity of the people who are entitled to receive subsidies which are not yet accurate. “This is very important, yes, if we want to have energy subsidies that are right on target, we must have valid community data,” Effendi said.

The target of Beneficiary Families (KPM) is 40% of the population with the lowest income. Then the target types of work are micro businesses, small fishermen and small farmers. In carrying out the subsidy reform, he said there are challenges faced by the government, namely high commodity prices which have led to an increase in the need for subsidies and energy compensation. In addition, there is a risk of contingent liabilities in energy subsidies, the price adjustment policy has not been implemented, resulting in compensation of Rp 235 trillion in 2017 to 2021.

“The situation is becoming rather dangerous. Because this shows that Indonesia is still very dependent on fossil fuels as an energy source,” Effendi said.

For example, since 2004, he said, Indonesia is a net importer of oil. Then in the last few months, commodity prices, including energy, tended to increase. According to him, this will have an impact on the State Budget. On the other hand, energy sources and electricity production from new and renewable energy (EBT) have increased production, while new and renewable energy to total energy supply and total electricity production tends to decline from year to year.

“We also have renewable energy such as solar panels, from wind or from water. Unfortunately, in recent years the proportion has tended to decrease,” he concluded. (Hartatik)

Like this article? share it

More Post

Receive the latest news

Subscribe To Our Weekly Newsletter

Get notified about new articles