Scarcity of Subsidized 3kg LPG, Time to Reorganize Distribution System for Poor Communities

Illustration of 3 kg LPG LPG. How to find the nearest 3 kg LPG base online. How to find the nearest 3 kg LPG base online. (KOMPAS.COM/IRWAN NUGRAHA)

Jakarta, The PRAKARSA (Institute for Policy Research and Advocacy) – President Prabowo Subianto has instructed Minister of Energy and Mineral Resources Bahlil Lahadalia to reactivate retailers selling 3 kg LPG gas.

After, some time ago the Ministry of Energy and Mineral Resources issued a circular letter of the Director General of Oil and Gas No. B-570/MG.05/DJM/2025, starting February 1, 2025, 3 kg LPG may only be distributed directly to end users, such as households, micro businesses, farmers, and fishermen who meet the requirements.

This policy creates many problems and makes things even more difficult for the poor.

As a primary energy commodity for households, subsidized 3kg LPG should be a mainstay of the lower middle class' daily activities. However, the government's policy of limiting the distribution of 3kg LPG only through authorized agents has actually triggered shortages in several regions.

Scarcity Exacerbated by Government Policy and Unpreparedness of Official Agents

Bintang Aulia Lutfi, Researcher at The PRAKARSA criticized that this step has the potential to worsen public welfare.

Artificial scarcity due to restrictive policies slows down the economic activities of lower-middle class people. Long queues, searching for official agents, distant access to agents, limited stock of 3kg LPG gas make it difficult for households and MSME entrepreneurs to obtain LPG gas. This poses a risk to households who are forced to allocate more funds for energy or switch to non-environmentally friendly fuels, such as wood or kerosene.

"Instead of narrowing distribution channels, the government needs to strengthen price supervision at the retail level. 3kg LPG is a public right, not a commodity that can be manipulated by system ineffectiveness," he said, Tuesday (4/2/2025).

Bintang sees that the main problem is not the existence of retailers, but rather the weak supervision of prices at the retail level. The government needs to strengthen the monitoring system and strict sanctions for markup perpetrators, not punish consumers by limiting access.

The restriction of subsidized 3kg LPG sales only through authorized agents to prevent price markups by retailers needs to be reviewed. The capacity of authorized agents to meet public demand has proven inadequate, resulting in shortages. In fact, the participation of local retailers should be able to expand public access to this subsidy.

Bintang also highlighted that distribution restrictions would actually give rise to a black market and impact vulnerable communities.

"LPG is an inelastic primary good, where price increases do not significantly reduce demand because it is a basic need. Instead of solving the markup problem, distribution restrictions actually risk creating a black market with higher prices, and this will burden vulnerable groups," he added.

The scarcity in the community reflects the unpreparedness of official agents in distributing 3kg LPG evenly and on time. Bintang emphasized that the government needs to strengthen collaboration with registered retailers, accompanied by digital data collection, this can be a short-term solution to ensure subsidies are right on target.

The government needs to evaluate the capacity of authorized agents and involve trusted retailers in distribution. Optimizing data collection technology, such as QR Code, is essential to ensure that subsidies are targeted. The government must also improve market operations and impose strict sanctions on those who mark up.

"It is important for the community to be empowered to report unscrupulous sellers through an integrated complaint channel," Bintang concluded.

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