UNAIR NEWS – National Economic Council (DEN) Chairman Luhut Binsar Pandjaitan has announced that the government’s plan to implement a single-fuel price policy could be realized by 2027. Speaking at the Economic Outlook 2025 forum in Jakarta on Thursday (Feb. 20, 2025), Pandjaitan confirmed that fuel subsidies will be discontinued. Instead, the government intends to provide direct financial assistance to those in need.
Dr. Agie Nugroho Soegiono, SIAN, MPP, a Public Administration lecturer at Universitas Airlangga (UNAIR), responded to the proposed policy, emphasizing that subsidies must be allocated effectively. He underscored the importance of a transparent distribution mechanism backed by accurate data, noting that the current system lacks strict regulations for accessing subsidized fuel.
“Subsidy funds must be channeled in ways that genuinely improve public welfare, particularly for lower-income communities. This requires a transparent framework based on highly precise data to ensure no group is unfairly disadvantaged,” Soegiono explained.
Policy implications
Soegiono pointed out that a standardized fuel price could benefit communities outside Java, particularly in remote regions where fuel costs are typically higher due to limited distribution infrastructure. However, he stressed that for the policy to be effective, the government must invest in infrastructure development to prevent excessive logistical expenses.
“Communities in remote areas need more than just a uniform fuel price—they require robust infrastructure to ensure stable fuel availability and to keep operational costs from soaring. Fuel prices outside Java are generally higher because supply chains are inefficient, and distribution to remote locations remains a major challenge,” he said.
He further noted that the policy shift would have a direct impact on the transportation sector and small businesses, which could see higher operational expenses. To mitigate the potential rise in living costs, Soegiono suggested that the government introduce transportation subsidies to offer affordable alternatives for the public.
Navigating transition
Soegiono also outlined key measures to ensure a smooth transition. He urged the government to develop structured support mechanisms for small enterprises and other affected sectors to prevent sharp price increases in goods and services. Additionally, he emphasized the need for widespread public education campaigns to ensure that communities are well-informed and prepared for the fuel price adjustment.
“This policy represents a significant step toward energy equity and economic welfare. However, its success will depend on the government’s ability to strengthen infrastructure, enhance data accuracy, and enforce strict oversight. If these three elements are effectively managed, the single-fuel price policy has the potential to create a more efficient and equitable economy,” Soegiono concluded.
Author: Khumairok Nurisofwatin
Editor: Edwin Fatahuddin
