Jakarta. Indonesia’s new government-led system for importing crude oil, fuel and liquefied petroleum gas (LPG) must prove it can secure reliable supplies, keep energy prices affordable and reduce state spending on subsidies and compensation, ReforMiner Institute Executive Director Komaidi Notonegoro said.

“Direct state intervention must demonstrate that it can deliver more competitive commodity prices while reducing the burden of energy subsidies and compensation,” Komaidi said, as quoted by Antara on Thursday.

Presidential Regulation (Perpres) No. 107/2026 marks a fundamental shift in Indonesia’s energy procurement, moving imports from a market-based corporate model to government-to-government (G2G) and government-to-business (G2B) arrangements. The procurement process will be handled by the Energy and Mineral Resources Ministry’s public service agency (BLU), Lemigas.

The regulation expands the state’s role beyond policymaking and market oversight to direct involvement in strategic energy procurement. Government-to-government diplomacy is expected to strengthen long-term supply security amid global geopolitical uncertainty.

Under the new framework, Lemigas will handle procurement, while state-owned energy company Pertamina will serve as the offtaker and manage the physical supply chain, Komaidi said.

Pertamina’s technical expertise, reputation and global trading network will be crucial to implementing the policy, he added. Combining the government’s diplomatic leverage with Pertamina’s commercial capabilities could strengthen Indonesia’s negotiating position in international energy markets.

“The combination of the state’s political leverage and Pertamina’s agility through its global business network will create stronger bargaining power internationally,” Komaidi said.

However, he warned that the new procurement system requires regulatory alignment to ensure legal certainty and accountability.

Articles 9 and 23 of the 2001 Oil and Gas Law govern downstream oil and gas activities, while Lemigas operates under the state financial management framework established by the 2004 State Treasury Law. The government therefore needs implementing regulations, either through an Energy Ministry regulation or a Finance Ministry regulation, to address service tariffs, inventory accounting and commodity hedging guidelines.

The formulas used to calculate fuel compensation and LPG subsidies must also be adjusted so that procurement prices under the Lemigas system are automatically incorporated into the state budget (APBN). This would provide greater certainty over financing while strengthening accountability in energy procurement.

Komaidi said the ongoing deliberations on the Oil and Gas Bill could provide an opportunity to establish a stronger long-term legal foundation for energy procurement institutions.

Plans to establish a special oil and gas business entity could also offer a way to integrate import procurement functions currently handled by Lemigas.

Institutional reforms should also clearly separate Indonesia’s strategic energy reserves, governed by Presidential Regulation No. 96/2024, from commercial stocks used for daily operations. The distinction would help prevent strategic reserves from being mixed with routine energy trading inventories.

Komaidi also stressed the importance of legal protection for officials overseeing strategic energy procurement, enabling them to make timely decisions amid volatile global markets while maintaining transparency and accountability.

He said the Perpres was an initial step toward restructuring Indonesia’s national energy security framework, but its success would depend on interagency coordination, consistent implementing rules and tangible benefits for the public.

“With close coordination between Lemigas and Pertamina, aligned operational regulations and institutional governance secured through the Oil and Gas Bill, Indonesia can establish a reliable, affordable and resilient energy supply system while saving state funds,” Komaidi said.

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