he economic price of subsidized fuel is now twice as high as the domestic retail price, the senior downstream minister has revealed, pointing to the immense burden of fuel subsidies for the state budget at a time when global oil prices are surging.
Coordinating Downstream and Energy Transition Minister Bahlil Lahadalia, who also helms the Energy and Mineral Resources Ministry, said the true cost of subsidized Pertalite fuel had exceeded double the pump price of Rp 10,000 (55 US cents) per liter.
Bahlil said high global prices of crude oil was the primary driver behind the increase in fuel costs, while explaining that the government was continuously monitoring global energy price trends to ensure that the burden was not passed directly to Indonesian consumers.
“Do you know, ladies and gentlemen, that as a result of all this, the [actual] price of fuel has reached Rp 20,000 per liter? It is now above Rp 20,000 per liter,” he said on Sunday during the inauguration of the Golkar Party’s Maluku chapter, which was broadcast online.
Despite being a net oil importer due to low domestic production relative to demand, the government subsidizes the two most widely consumed fuel brands nationally: Pertamina’s RON 90 gasoline Pertalite and diesel fuel Solar.
Both are subject to annual volume quotas, the government covering the gap between market and administered prices through direct subsidies and compensation to Pertamina.
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Bahlil noted that global crude prices once reached $105 per barrel due to geopolitical uncertainty, though this later fell to $94 per barrel, influenced by political dynamics in the United States.