Description & Progress
The study is part of a broader project on energy and gender supported by the International Network on Gender and Sustainable Energy (ENERGIA) and the UK Department for International Development (DfID), that has completed an international literature review and scoping studies in Bangladesh, India and Nigeria.
The Government of Indonesia is considering reform of its consumer subsidies for liquefied petroleum gas (LPG) due to their rising fiscal cost: IDR 25 trillion (US$ 1.9 billion) in 2016 – around half of its total energy subsidy expenditure. Subsidized 3kg LPG cylinders are currently available to all citizens. Reforms are likely to target the subsidy to the poor or replace it with cash transfers through the social assistance system.
The impact of energy subsidy reform on the poor has been widely studied. While most subsidy benefits tend to be captured by the wealthy that have the most purchasing power, poor households are most vulnerable because they can least afford higher energy prices. Gender differentiated impacts are, however, poorly understood. In the case of LPG, a household fuel used for cooking, women are likely to be more affected than men because they do most of the cooking and household management.
This research project aims to inform the study of vulnerability for poor and near-poor women in LPG subsidy reform by examining the status of existing data relevant to energy use and gender in Indonesia. In particular, it aims to identify: relevant background information; and, relevant prior work that could instruct research or indicate that no additional research effort in that area is required.
How subsidy policies affect fuel distribution?
- the extent to which subsidy expenditure flows through into lower retail prices (due to high-level corruption or low-level diversion by black marketeers)?
- the extent to which lower prices influence fuel use?
- the extent to which fuel use affects the lives of women?
- the policy efficiency, which is to say the cost per unit of any positive impacts observed, taking into account the expenditure that is frequently captured by higher-income households?
Data was collected primarily from five national household data surveys:
- the National Socio-Economic Survey (Susenas) 2015
- the Indonesian Family Life Survey (IFLS) 2014
- the National Labor Force Survey (Sakernas) 2015
- the Indonesia Demographic and Health Survey (IDHS) 2012
- LSI Social Issues Survey (LSI) 2014.
The data audit is conducted over the following indicators:
- Welfare: time spent on different household activities, education and media access
- Productivity: employment and income
- Empowerment: decision-making on household expenditure, ownership, and political empowerment
The data audit found no quantitative studies dedicated to gender and LPG use in Indonesia. National survey data was available on energy usage and a range of gender issues. However, this data audit demonstrates a strong case for the consideration of women in the design of LPG subsidy policy. This may have practical relevance in the following areas:
- If LPG prices increase, income and energy access impacts may be clustered on women. Poor and near-poor rural women in remote provinces are particularly vulnerable. This suggests that any mitigation measures used to target LPG subsidies to low-income consumers or to provide non-energy forms of compensation may want to target women as principal beneficiaries.
- Many women and men in low-income households do not receive any benefit from the current subsidy program. Those purchasing subsidized LPG are paying much more than the official price. This indicates a need to reform the current distribution and pricing system. If LPG subsidy reforms result in savings, a share of these savings should be dedicated to extending the reach and fairness of LPG distribution.
- If LPG prices increase, households need to be educated about the impact of switching to lower quality energy sources. Both men and women need to be targeted in communication materials, noting that men often play a dominant role in financial decisions.
SMERU researcher had presented the findings of the study in APEC Fossil-Fuel Subsidy Reform Workshop in Jakarta in July 2017. SMERU had also been invited to discuss the findings of this study in Pusat Kajian Anggaran DPR RI in August 2017.