San Francisco Frontiers - Indonesia rations fuel as prices soar over Mideast 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 Airlangga Hartarto, the coordinating minister of economic affairs.

Speaking at a virtual news conference from Seoul, he also said that civil servants will work from home every Friday, part of the government's efforts to save energy.

The government said earlier Tuesday it would not increase the price of fuel, which is heavily subsidised in Indonesia.

The Southeast Asian archipelago is an oil producer but nevertheless a net importer.

The government has doggedly defended the subsidy, which at $12.3 billion represents about five percent 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 three percent of gross domestic product.

The 2026 fuel subsidy calculation was premised on a global oil price of $70 per barrel, but prices have since topped $100.

Airlangga said that "the national economic condition remain stable with strong fundamentals. National fuel stocks are safe and fiscal stability is maintained."

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 sent to AFP earlier said there would be no 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, Southeast Asia's biggest economy has not seen long fuel queues as global oil prices have 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 US-Israeli strikes on Iran on February 28.

Earlier this month, the Indonesian presidency spokesman Prasetyo said the government was looking to set aside up to 80 trillion rupiah (about $4.7 billion) to shield the economy from the fallout.

On Sunday, 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 percent last year to eight percent by 2029, powered by high public spending.

P.Thomas--SFF