Gov't Proposes 2026 Fuel Subsidy at Up to 19.5 Million Kiloliters

TEMPO.CO, Jakarta - Minister of Energy and Mineral Resources Bahlil Lahadalia proposed that fuel oil (BBM) subsidies for 2026 would amount to 19.28 to 19.5 million kiloliters.

The proposed subsidy allocation includes 0.52 to 0.54 million kiloliters for kerosene and 18.53 to 18.74 million kiloliters for diesel.

In addition, the government suggested continuing the subsidy for 8.31 million metric tons of 3-kilogram LPG. Bahlil noted that the LPG subsidy would continue to be given in the form of a price difference, similar to kerosene.

During a meeting with Commission XII of the House of Representatives on Wednesday, July 2, 2025, Bahlil also revealed plans to reduce diesel subsidies.

He explained that if Indonesia fully adopts the B50 biodiesel blend in 2025, the country would no longer need to import diesel by 2026.

"But with the condition that domestic production does not decrease and B50 is fully implemented. If we still stick to B40, there will be a difference between consumption and production, so there may still be a slight import," he said.

Bahlil also shared the government’s plan to revise the presidential regulation concerning 3-kilogram LPG in an effort to prevent subsidy misuse. One of the options under consideration is the introduction of a national standard price to reduce regional price gaps.

"So far, the state has allocated subsidies ranging from Rp10 to Rp87 trillion per year. If the prices keep rising and are not controlled, the government's target and the reality on the ground may not be in sync," he said.

For diesel, the government has proposed continuing the subsidy at Rp1,000 per liter. Currently, the economic price of diesel is Rp10,343 per liter, while the subsidized retail price remains at Rp6,800 per liter.

"Diesel remains the main fuel for land transportation, sea transportation, trains, fisheries, agriculture, micro business, and public services," said Bahlil.

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