Jakarta. Indonesia will cut its energy subsidy budget for 2027 by Rp 11.4 trillion ($635.10 million) to Rp 261.5 trillion, citing improvements to recipient data aimed at ensuring assistance reaches households that need it most.

The agreed allocation is lower than the Rp 272.94 trillion initially proposed in the 2027 State Budget (APBN) financial note and draft budget (RAPBN), House of Representatives Budget Committee chairman Said Abdullah told reporters during a plenary session at the House complex in Jakarta on Tuesday.

Said explained that the reduction in energy subsidies would not undermine the government's commitment to public welfare, as better recipient data would help improve targeting and make spending more efficient.

“The subsidy reduction is accompanied by improvements to recipient data, ensuring that energy subsidies are better targeted and our budget is used more efficiently,” he said.

Said added that the data improvements would help address long-standing errors in energy subsidy distribution, under which some eligible households failed to receive assistance while others who did not qualify benefited from it.

“By improving the accuracy of recipient data, this measure will help correct errors in energy subsidy distribution that have persisted for years,” he said.

Under the agreement, the government and lawmakers adjusted the planned volumes and allocations for fuel and liquefied petroleum gas (LPG) subsidies, while keeping the electricity subsidy unchanged.

The planned volume of subsidized fuel was reduced to 19.56 million kiloliters from 20.10 million kiloliters in the initial budget proposal. Meanwhile, the allocation for subsidized kerosene increased to 561,000 kiloliters from 539,000 kiloliters.

The planned volume of subsidized diesel was also adjusted from 19.56 million kiloliters to 19,000 kiloliters, while the allocation for 3-kilogram LPG cylinders was revised from 8.945 million metric tons to 8,000 metric tons. The figures reflect the agreement as provided in the budget documents.

The fixed diesel subsidy remained unchanged at Rp 1,000 per liter.

The budget for fuel and 3-kg LPG subsidies was cut to Rp 131.39 trillion from Rp 142.83 trillion in the initial proposal. This comprised Rp 28.34 trillion for specific fuel subsidies, down from Rp 28.69 trillion, and Rp 103.05 trillion for 3-kg LPG subsidies, down from Rp 114.14 trillion.

The electricity subsidy remained at Rp 130.1 trillion, comprising Rp 117.84 trillion for the current year and Rp 12.26 trillion to cover underpayments from 2025.

As a result, total energy subsidies, covering fuel, 3-kg LPG and electricity, were set at Rp 261.5 trillion, down Rp 11.4 trillion from the initial proposal.

The government has been revising the National Single Social and Economic Data (DTSEN), which serves as a basis for determining subsidy recipients, to address persistent targeting problems.

The DTSEN ranks households by socioeconomic welfare and divides them into 10 groups, each representing about 10% of households. Decile 1 comprises the poorest households, while decile 10 comprises the wealthiest.

“Households in the lower deciles have tended to receive fewer benefits from energy subsidies. Therefore, the government will continue to refine DTSEN as the basis for determining subsidy recipients,” he said.

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