Indonesia Implements New Energy Compensation Scheme

Short-Term Relief for State-Owned Energy Firms

The Indonesian government has introduced a new compensation scheme for state-owned energy companies through Finance Minister Regulation (PMK) No. 73/2025, signed on November 6, 2025. The regulation mandates that 70% of compensation for fuel and electricity subsidies will be disbursed monthly based on a monthly review of calculations. This move is seen by analysts as providing short-term cash flow relief rather than addressing fundamental financial issues.

Analyst Perspective on Financial Impact

Ronny P Sasmita, Senior Analyst at Indonesia Strategic and Economic Action Institution, notes that while this policy will strengthen the financial position of PLN and Pertamina, it is more accurately described as a short-term cash flow improvement rather than a fundamental strengthening. "This is a tactical step, not a strategic solution," Sasmita added, highlighting that it reduces daily financial pressure but doesn't address structural financial issues.

Implications for State-Owned Energy Companies

The new compensation scheme is expected to improve the liquidity of both PLN and Pertamina, Indonesia's state-owned electricity and oil companies. By receiving 70% of their compensation monthly, these companies will experience better cash flow management. However, analysts caution that this measure doesn't solve the underlying financial challenges faced by these entities.