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View all search resultsAnalysis: Pertamax price hike highlights Indonesia’s costly fuel subsidies
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Attendants of a gas station owned by state-owned energy holding company Pertamina serves customers on Feb. 27, 2025, in Semarang, Central Java (Antara/Aprillio Akbar). (Antara/Aprillio Akbar)
T
he government has finally green-lit the price increase for Pertamax, the widely used nonsubsidized gasoline with research octane number (RON) 92, after months of attempting to shield consumers from rising global oil prices triggered by the United States-Israeli war on Iran, particularly disruptions due to closure of the Strait of Hormuz. While the move is expected to ease pressure on public finances, it also creates new risks such as consumers shifting to subsidized fuels, increasing the government's subsidy burden.
The episode has, once again, highlighted the long-standing issue of poorly targeted fuel subsidies that often fail to protect vulnerable groups.
PT Pertamina Patra Niaga, the commercial trading subsidiary of state-owned energy holding company Pertamina, announced on June 10 that it had raised the price of Pertamax from Rp 12,300 (69 US cents) per liter to Rp 16,250 per liter. It also increased the price of Pertamax Green, a RON 95 biofuel blend, from Rp 12,900 to Rp 17,000 per liter.
The prices of other nonsubsidized fuel brands remained unchanged from earlier adjustments: Pertamax Turbo (RON 98) at Rp 20,750 per liter, Pertamina Dex diesel with cetane number (CN) 53 at Rp 24,800 per liter and Pertamina Dexlite (CN51) at Rp 23,000 per liter.
According to the Finance Ministry, the price hikes for Pertamax and Pertamax Green will have a limited impact on inflation because these products were not widely used by public transportation or freight operators. Meanwhile, National Energy Council (DEN) member Satya Widya Yudha said the adjustment was intended to reduce the government's fiscal burden after months of absorbing higher energy costs as well as to restore the market-based pricing mechanism for nonsubsidized fuels.
However, the policy may ultimately create new fiscal pressures rather than alleviate them.
Following the price hike, motorists began switching from Pertamax to subsidized Pertalite (RON 90), which remains at an affordable Rp 10,000 per liter. The surge in demand has strained supplies in several regions, leading to long lines and temporary shortages at some gas stations.
