What Kadin Recommends to Handle Rising Oil Prices

Kadin Indonesia Institute's Fakhrul Fulvian asserts that as global oil prices near US$100 per barrel, the B50 biofuel initiative gains strategic importance. He explains that B50 is not merely an energy policy, but a catalyst for transforming domestic industry and enhancing Indonesia's balance of payments. By implementing B50, the country could displace 18 million kiloliters of imported diesel and save around Rp170 trillion in foreign exchange, reducing its reliance on external finance.

Fakhrul emphasizes that while B50 addresses oil price volatility, the next step involves creating a new industrial ecosystem comprising refining, storage, terminals, blending, logistics, engineering, and equipment manufacturing. The institute is pushing for a B50 Industrial Transformation Roadmap that sets blending targets and develops feedstock, refining capacity, distribution infrastructure, machinery readiness, domestic equipment, and sustainable aviation fuel.

Fakhrul stresses the need to consider end-user sectors like mining, plantations, trucking, shipping, and heavy-equipment industries, urging the government to monitor potential hidden costs such as elevated maintenance, downtime, and reduced productivity. He underlines that while foreign exchange savings are significant, B50 must deliver net economic benefits for Indonesia.

Meanwhile, Energy and Mineral Resources Minister Bahlil Lahadalia responds to oil prices exceeding US$108.68 per barrel, admitting that rising crude prices strain state finances and increase subsidy expenditures. Despite oil prices surpassing US$100 per barrel, the average Indonesian Crude Price in the 2026 State Budget remains between US$80 and US$90 per barrel.

Bahlil confirms that the government will not raise subsidized fuel prices, prioritizing public purchasing power over expanding the subsidy budget.