Kemenkeu Reorganizes the Governance of Energy Subsidy Compensation Funds

The Government is currently preparing a Draft Regulation of the Minister of Finance (Rancangan Peraturan Menteri Keuangan– “ RPMK ”) on the Governance of Compensation Funds for Business Entities Arising from the Policy on the Determination of Fuel (Bahan Bakar Minyak– “ BBM ”) Prices. This regulation follows up on the recommendations Indonesia’s Financial Audit Agency (Badan Pemeriksa Keuangan– “ BPK ”) and the findings of the Inspectorate General of the Ministry of Finance resulting from audits of the planning, budgeting, and disbursement of BBM and electricity subsidies and compensation.

“The key issues related to the basis for changes in the compensation fund calculation formula for electricity tariffs, the calculation of BBM volume based on nozzle output, and the data transfer mechanisms required for the review of compensation funds,” stated a Ministry of Finance official, who requested anonymity, in a statement to Hukumonline.

This RPMK also regulates the quarterly and annual review process for compensation funds, the conduct of ministerial-level coordination meetings for policy decision-making, the business processes for budgeting and payment, as well as mechanisms for audit and accountability.

The formulas for calculating electricity compensation funds and BBM volume have already been incorporated into the regulation amendments that have been established, as stipulated in Regulation of the Minister of Finance No. 159/PMK.02/2022 of  2022 on the Amendment to Regulation of the Minister of Finance No. 159/PMK.02/2021 on Procedures for the Provision, Disbursement, and Accountability of Compensation Funds for Business Entities Due to the Policy on Retail Selling Prices of BBM and Electricity Tariffs (“ Permenkeu 159/2022 ”), and Regulation of the Minister of Finance No. 2 of 2024 on the Procedures for Calculation of Certain Percentages on the Increase of Energy Subsidy and/or Compensation Expenditures Imposed on the Increase in Shared Non-Tax State Revenues from Natural Resources (“ Permenkeu 2/2024 ”).

“The process is currently being harmonized among the relevant PAK,” [RS1] he added.