Jakarta. The government's decision to raise the price of Pertamax gasoline from Rp 12,300 to Rp 16,250 per liter is a realistic step toward reducing fiscal pressures, but it could also trigger a large-scale shift by motorists to subsidized fuel, according to an energy analyst.

Fahmy Radhi of Gadjah Mada University said the increase, announced after being held back for three months, suggests the government has begun addressing the growing burden of energy compensation payments.

“After holding back the adjustment for three months, the government has finally raised the price of Pertamax from Rp 12,300 to Rp 16,250 per liter. This indicates that the government is becoming more realistic about reducing budget expenditures for energy compensation,” Fahmy said on Wednesday.

However, he warned that the price gap between Pertamax and subsidized Pertalite has widened significantly, creating a strong incentive for consumers to switch to the cheaper fuel.

With Pertalite remaining at Rp 10,000 per liter, the difference between the two gasoline grades now exceeds Rp 6,000 per liter.

According to Fahmy, a large-scale migration of consumers from Pertamax to Pertalite could undermine the government's objective of reducing fiscal pressures. Higher consumption of subsidized fuel would increase the amount of state support required, potentially offsetting savings from the Pertamax price adjustment.

“A price gap of that magnitude could encourage Pertamax users to migrate to Pertalite. The result would be a larger fuel-subsidy burden. If the migration becomes widespread, the goal of reducing budget expenditures may not be achieved,” he said.

Beyond fiscal concerns, Fahmy warned that a surge in demand for Pertalite could create supply pressures if the government does not adjust distribution quotas accordingly.

“Another consequence of migration from Pertamax to Pertalite would be higher demand for Pertalite. If quotas are not increased following the Pertamax price hike, shortages could occur, leading to queues at fuel stations,” he said.

Such shortages could create broader social tensions and disrupt economic activity, he added.

Government data show that subsidized fuel consumption has already been rising. According to the Finance Ministry, distribution of subsidized fuels reached 6.31 million kiloliters during the January-May 2026 period, an increase of 8.6% from a year earlier. The figure includes subsidized Biosolar diesel, which remains priced at Rp 6,800 per liter.

Energy subsidies also cover three-kilogram LPG cylinders, with distribution reaching 2.86 billion kilograms during the same period, up 2.7% year-on-year. Meanwhile, the number of subsidized electricity customers increased 2.1% to 43 million.

As a result, government spending on energy subsidies and compensation surged to Rp 203.7 trillion ($11.3 billion) in the first five months of 2026, representing a 208% increase from the same period last year.

The latest fuel-price adjustment highlights the difficult balancing act facing policymakers as they seek to contain subsidy costs while avoiding disruptions to fuel supply and consumer purchasing power amid rising energy prices and a weaker rupiah.

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