Indonesia is in the final stages of reforming regulations related to the distribution and supervision of its 3-kg liquefied petroleum gas (LPG) subsidy, according to Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia.

Bahlil, speaking on Friday, May 9, 2025, emphasized the urgency of establishing stronger oversight for the subsidy, which is valued between US$5 billion to 5.5 billion annually. “The regulation is almost final. We will announce it when it's final,” he said on Friday, May 9, 2025.

He acknowledged that the current supervisory mechanism, which involves only a limited number of second-tier officials, is inadequate. “It’s not fair that the fuel subsidy of US$9 billion to 11.3 billion is supervised by BPH Migas (Downstream oil and gas regulatory agency), while the LPG subsidy is only monitored by seven members of a second-level team,” Bahlil said.

To address this imbalance, the government is currently studying two main options, namely establishing a dedicated new body or forming an ad-hoc team.

“We have studied it [the issue] enough in February. I won't make a mistake anymore,” Bahlil warned, sending a firm message to potential abusers: “Whoever cntinues to play around with this matter, I won't take a step back.”

Indonesia’s 3-kg LPG cylinder program was originally introduced to provide affordable cooking gas to low-income households. However, over the year s, the subsidy has faced persistent challenges, particularly regarding its accuracy in reaching the intended beneficiaries.

Government audits and reports have shown that a significant portion of the subsidized LPG ends up being consumed by middle- and upper-income households, small businesses, and even industrial users − groups not targeted by the subsidy. This leakage has not only caused fiscal inefficiencies but also undermined the original social objective of the program.

To address this, the Indonesian government has been working on improving the distribution mechanism. Key strategies under consideration include digitizing the distribution chain, requiring users to register with a national identity system, and limiting purchases through verified vendors. The planned reforms aim to ensure that the estimated US$5–5.5 billion annual subsidy genuinely benefits those who need it most, while reducing opportunities for misuse and black-market resale.

Bahli's recent remarks underline the government's determination to enhance supervision and accountability in this sector, ensuring fair and efficient use of public funds.