Jakarta – Through the 2025 Draft State Budget (RAPBN), the government has prepared a budget allocation of Rp394.3 trillion for energy subsidies and compensation. This figure has increased by 17.8 per cent compared to the 2024 ceiling, which only amounted to Rp334.8 trillion.
Finance Minister Sri Mulyani Indrawati emphasized that this budget increase is part of the government’s commitment to strengthening national energy security.
“Energy security is an important priority, and we allocate IDR 421.7 trillion for energy security in the 2025 Draft State Budget, with a portion of IDR 394.3 trillion for energy subsidies and compensation,” said Sri Mulyani during the 2025 Draft State Budget press conference, Monday, August 19.
Sri Mulyani explained that the energy subsidy and compensation funds would be allocated for several main programs. Continuing subsidies for 3-kilogram cylinder LPG, diesel, and kerosene are among them.
In addition, energy subsidies will support electricity for poor and vulnerable households and encourage an efficient and equitable energy transition.
“The government will also ensure the accuracy of targeting these subsidy programs so that they can be enjoyed by those who are entitled,” Sri Mulyani added.
Not only that, the budget will also be used as a fiscal incentive to increase oil and gas lifting in response to a request from Energy and Mineral Resources (EMR) Minister Arifin Tasrif. The government plans to revise Government Regulation (PP) No. 27/2017 on cost recovery and PP No. 53/2017 on gross split to increase investment attractiveness in the oil and gas sector.
“We will always coordinate with technical ministries to ensure fiscal instruments can encourage the production of energy security by increasing oil and gas lifting,” Ms Indrawati said.
The 2025 Draft State Budget allocates Rp131.3 trillion for non-energy subsidies in addition to energy subsidies. This is a significant increase of 35.5 percent from the 2024 ceiling of only Rp96.9 trillion. These funds will be focused on food security through fertilizer subsidies and supporting housing programs for low-income people.
“The government continues to support the community by providing targeted subsidies, both in energy and non-energy. This includes providing easy access to People’s Business Credit (KUR) for MSMEs, farmers, fishermen, and tax incentives for the business sector,” Sri Mulyani concluded.
With this budget increase, the government hopes to strengthen energy security and the national economy and support the achievement of sustainable development targets. (Hartatik)
