The government’s decision to continue supplying Rp. 123.6 billion of energy subsidy in 2012 does not reflect any significant policy in the sector.

In presidential speech regarding state budget draft (RAPBN), President Soesilo Bambang Yudhoyono (SBY) did not mention a more implementative energy policy in the form of tariff adjustment and energy limitation. President SBY stated that allocation of power subsidy for 2012 RAPBN will be reduced to Rp. 168,6 billion from the previous Rp. 195.3 billion in 2011. Fuel (BBM) subsidy will be reduced to Rp. 123.6 billion from this year’s Rp. 129.7 billion while electricity is to be adjusted at Rp. 45 billion from Rp. 65.6 billion.

The high rate of next year’s energy subsidy shows that there is no significant improvement of energy policy to be implemented by the government. It has stated in the draft that by 2012 power tariff (TDL) will increase by 10%, and power subsidization will be reduced. However there are no significant changes on BBM policy.

Indonesian government is going to encourage the use of alternative energy, such as gas fuels (BBG) and biofuels (BBN). According to state power company, the TDL raise will be implemented gradually beginning in April 2012.