Indonesia rations fuel as prices soar over Middle East war
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Unlike some of its neighbours, Indonesia has not seen the long fuel queues that have formed as global oil prices soar.
PHOTO: AFP
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JAKARTA – Indonesia announced on March 31 fuel rations and mandated work from home for civil servants, as it seeks to conserve energy stocks amid global price hikes due to the Middle East war.
“To ensure fuel distribution, the government will regulate purchases, with a reasonable limit of 50 litres per vehicle” per day for private consumers, said Mr Airlangga Hartarto, the coordinating minister of economic affairs.
Speaking at a virtual news conference from Seoul, he also said civil servants will work from home every Friday as part of the government’s efforts to save energy.
The government said earlier on March 31 it would not increase the price of fuel, which is heavily subsidised in Indonesia. The archipelago nation is an oil producer, but nevertheless a net importer.
The government has doggedly defended the subsidy, which at US$12.3 billion (S$15.8 billion) represents about 5 per cent of the total annual budget for 2026.
Observers say the government’s hand may eventually be forced, given that Indonesia is required by law to keep its fiscal deficit under 3 per cent of gross domestic product.
The 2026 fuel subsidy calculation was premised on a global oil price of US$70 per barrel, but prices have since topped US$100.
Mr Airlangga said “the national economic condition remains stable with strong fundamentals. National fuel stocks are safe and fiscal stability is maintained”.
Mr Bahlil Lahadalia, the energy minister, said: “We need the support and cooperation of the public. We need to purchase fuel reasonably and wisely.”
‘No price adjustment’
A government statement said earlier there would be no price increase “for subsidised or non-subsidised” fuel from April 1.
It warned against “misinformation” about a pending price hike, quoting presidential spokesman Prasetyo Hadi as saying “we guarantee the availability of fuel, and there is no price adjustment”.
Previous fuel price hikes in Indonesia have resulted in mass protests. Unlike some of its neighbours, the country has not seen long queues for fuel as global oil prices soared due to Iran’s de facto closure of the strategic Strait of Hormuz.
A fifth of the world’s crude supplies and a substantial amount of gas normally run through the waterway, but traffic has effectively halted during the war, which began with the US-Israeli strike on Iran on Feb 28.
Earlier in March, presidential spokesman Prasetyo said the government was looking to set aside up to 80 trillion rupiah (S$6 billion) to shield the economy from the fallout.
On March 29, the government announced a one-day-per-week reduction in its free school meals programme, though not for areas with high malnutrition rates.
President Prabowo Subianto seeks to raise the economic growth rate from 5.1 per cent in 2025 to 8 per cent by 2029, powered by high public spending. AFP
