Indonesia Has Already Paid Rp331 Trillion for Fuel and Electricity Subsidies This Year. Here's Where That Money Actually Goes
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4 min read
By the end of August 2026, the government had paid Rp331,4 trillion in energy subsidies and compensation. A year earlier, the same eight months came to Rp218 trillion. That jump of about Rp113 trillion is the Indonesia fuel subsidy story in one line, and it ends up in your fuel price, your power bill and the national debt.
This post explains where the money goes, in plain steps. Every term is explained the first time it appears.
Here are the numbers as reported. The Ministry of Finance data via Kontan puts payments through August 2026 at Rp331,4 trillion, or 74,2% of the full-year target. It splits into two parts:
| Part | Paid Jan to Aug 2026 | Change vs same period 2025 |
|---|---|---|
| Subsidy (money to keep prices low) | Rp177,1 trillion | +29,17% |
| Compensation (repaying Pertamina and PLN) | Rp154,4 trillion | +18,45% |
| Total | Rp331,4 trillion | about +Rp113 trillion |
The original plan was smaller. The 2026 budget set aside Rp210,1 trillion for energy subsidies: Rp104,65 trillion for electricity and Rp105,41 trillion for fuel and 3 kg LPG cooking gas, according to Detik.
Then oil prices rose. Bisnis.com reports that the Finance Minister added Rp132 trillion to the subsidy and compensation need for 2026. Total state spending for the year was budgeted at Rp3.842,7 trillion and is now projected at Rp3.942,4 trillion.
Both words sound the same. They are not.
A subsidy is money the government pays directly so that a price stays low. Think of LPG 3 kg and subsidized electricity.
Compensation is a repayment. When the government orders Pertamina or PLN (the state oil and electricity companies) to sell below their real cost, it promises to cover the gap later. The company sells cheap now. The state pays the bill afterward.
Payments now go to both companies every month, Kontan reports, instead of every quarter.
Pertalite has cost Rp10.000 a liter since September 2022. The government has said it will not rise through the end of 2026. Subsidized Biosolar stays at Rp6.800.
The gap between that price and the real cost is large. Pertamina printed an unsubsidized Pertalite price of Rp18.040 a liter on purchase receipts in June 2026, Okezone reports. That is Rp8.040 of support on every liter, as reported.
Fuel prices are also a political topic. Raising them hits transport and food costs fast, and people feel it the same week. That is why governments find it hard to cut.
The most recent increase in subsidized fuel was on 3 September 2022. Pertalite went from Rp7.650 to Rp10.000 (up 30,72%) and Solar rose 32,04% to Rp6.800, according to Kontan.
Inflation reacted at once. BPS recorded 1,17% inflation in September 2022 from the month before, and 5,95% over the year. The transport group alone rose 8,88% in that month and added 1,08 percentage points to the total, per Bisnis.com.
Inflation is how fast prices rise. When it jumps, your savings buy less. Our post on the cost of holding cash shows what that does to idle money.
Every rupiah spent on subsidies is a rupiah not spent elsewhere, or a rupiah borrowed. The Finance Minister's outlook put the 2026 deficit at Rp734,3 trillion, or 2,85% of GDP, up from Rp689,1 trillion (2,68%), reported by Bisnis.com. A bigger deficit means more government bonds to sell. See how that works in our post on budget deficits and bond yields.
Oil prices also move the rupiah, which we cover in oil price shocks and the rupiah.
This is general information, not advice on what to hold. The point is simple: a subsidy that looks like a fuel price is really a line in the national budget.
Subsidy costs follow oil prices, the rupiah and inflation. Open the NetWort Macro dashboard to see inflation, the BI rate and USD/IDR side by side, and notice how they move when oil moves.