Indonesia expected to spend $5.11 bln on electricity subsidy in 2025
Indonesia’s state-owned electricity company (PLN) expects the government will spend IDR83 trillion ($5.11 billion) in 2025, an increase of nearly 10% compared to this year, to keep electricity prices stable for consumers.
An Indonesian worker examines the power system. Photo courtesy of Jakarta Post.
PLN General Director Darmawan Prasodjo said the estimate is based on rising oil prices and exchange rate assumptions outlined in next year's draft state budget (RAPBN).
The draft includes an assumption of an inflation rate between 1.5% and 3%. Nearly 65% out of the aforementioned sum, or IDR54 trillion ($3.33 billion) will be allocated to the household sector comprising 35.22 million customers.
Electricity subsidy spending for the social and corporate sectors is estimated to reach IDR12.2 trillion ($751.64 million) and IDR9.4 trillion, benefiting 2.13 million and 4.29 million customers, respectively. Electricity subsidies for industrial sectors as well as the government and other sectors are estimated to top IDR5.9 trillion and IDR1.6 trillion.
Meanwhile, statements from Finance Minister Sri Mulyani and a budget planning document suggest the government may cut energy subsidies and compensation next year. Analysts say that move will create fiscal space for the new administration to pursue new policies.
The government and the House of Representatives are drafting the 2025 state budget which is scheduled to be complete in September.
The draft will be signed right before President Joko Widodo resigns and President-elect Prabowo Subianto takes power this October.
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