Jakarta. Indonesia’s Energy and Mineral Resources Ministry (ESDM) has proposed allocating between Rp 97.37 trillion ($6 billion) and Rp 104.97 trillion ($6.49 billion) in electricity subsidies for 2026, targeting 44.88 million customers nationwide, primarily low-income and vulnerable households.

“This aims to drive a more efficient and equitable energy transition while considering economic, social, fiscal, and environmental aspects,” said Jisman P. Hutajulu, the ministry’s Director General of Electricity, during a hearing with the House of Representatives’ Commission XII on Monday.

The proposed subsidy is calculated based on macroeconomic assumptions, including an exchange rate of Rp 16,500–16,900 per US dollar, Indonesian crude oil prices between $60 and $80 per barrel, and an inflation rate ranging from 1.5 percent to 3.5 percent.

The subsidy will cover 44.88 million households, including customers with 450-volt ampere (VA) and 900 VA connections, as well as small businesses, industries, and the social sector.

Jisman outlined several measures to manage the subsidy burden, including managing the basic cost of electricity supply (BPP) and implementing roadmaps for specific fuel consumption and operational efficiencies in power plants to reduce operational costs.

The government is also promoting a natural gas price of $7 per million British thermal units (MMBtu) for power generation, capping purchase prices from independent power producers, and reducing transmission and distribution losses, particularly in remote and underdeveloped regions.

Additionally, the domestic market obligation (DMO) for coal, set at $70 per ton, will continue to help lower fuel costs for power plants.

The ESDM ministry reported that the majority of electricity subsidies currently benefit households, with 24.75 million customers in the 450 VA category and 10.49 million underprivileged customers in the 900 VA category out of 85.4 million total household customers.

“Household electricity subsidies accounted for 67.49% of the total in 2024 and are estimated to reach 64.41% in 2025. Meanwhile, total electricity subsidy realization in 2024 amounted to Rp 77.05 trillion,” Jisman said.