61 In 2015, the Power System Development Fund, set up in 2014, is used to subsidize LNG used in power generation. The assistance is for power plants with stranded capacity for lack of lower‐priced domestic gas, with unit subsidies in FY 2015/16 limited to Rs 0.94 (US$0.014)/kWh for stranded plants with no access to domestic gas and Rs 1.26 (US$0.019)/kWh for plants receiving domestic gas but experiencing gas shortages. The amounts set aside for that purpose are Rs 35 billion (US$530 million) in FY 2015/16 and Rs 40 billion (US$610 million) in FY 2016/17. This scheme uses e‐auctions in which bidders bid on the unit subsidy they are seeking (India 2015). E‐auctions were conducted in May and September 2015.

# **Indonesia**

The government has historically controlled and subsidized the prices of gasoline with 88 RON (“Premium”), diesel with maximum sulfur content of 0.35 percent (“Solar”), kerosene, and bottled LPG. Until recently, price adjustments were infrequent and not based on any rules. The prices of gasoline, diesel, and LPG were not changed between January 2003 and March 2005, when gasoline and diesel prices were raised. This was followed by very large price increases in October 2005 for gasoline, kerosene, and diesel. Prices were not adjusted again until May 2008, when they were raised by up to one‐third. The prices were lowered in December 2008 and January 2009, and were not adjusted for four and a half years until June 2013, when gasoline and diesel prices were raised. The two previous price reductions meant that after the relatively large price increases in June 2013, the nominal prices were virtually identical to those in May 2008. The regulated prices remained constant until November 2014, when gasoline and diesel fuel prices were raised by another third (Table 13). Because of the weaker rupiah, although the price increases of November 2014 were relatively large in local currency units, they were only 6 percent for gasoline and 11 percent for diesel when converted to U.S. dollars.

**Table 13: Price increases in Indonesia between 2005 and 2014**

|Fuel|Mar 2005|Oct 2005|May 2008|Jun 2013|Nov 2014|
|---|---|---|---|---|---|
|Gasoline|33%|88%|33%|44%|31%|
|Kerosene|0%|186%|25%|0%|0%|
|Diesel|27%|105%|28%|22%|36%|

_Sources:_ Government announcements of prices _. Note_ : Price reductions in December 2008 and January 2009 are not shown.

Energy subsidies grew until the end of 2014, when the world price of oil fell sharply. Budgetary transfers for power subsidies doubled and fuel subsidies quadrupled between 2009 and 2012 in nominal terms (Table 14). Energy subsidies have accounted for nearly 90 percent of total subsidies provided by the budget in recent years. LPG subsidies are growing rapidly because of the kerosene‐to‐LPG conversion program, intended to reduce kerosene subsidies while promoting adoption of a modern cooking fuel. The price of kerosene has been frozen since May 2008.

The kerosene‐to‐LPG conversion program, targeting households and microbusinesses, was launched in May 2007. The goal is to eliminate subsidized kerosene altogether by replacing kerosene with LPG. The free starter package includes a stove, a 3‐kg cylinder, a hose, and a regulator. The wholesale price of LPG sold in 3‐kg cylinders has been fixed at Rp 4,250 (US$0.33)/kg since January 2008. After adding transportation and other costs, retail prices were upwards of Rp 5,700 in the West Java area in 2015. By contrast, during the same period, for LPG sold in 12‐kg cylinders, Pertamina charged prices ranging from