Fuel subsidy estimated lower this year: Minister

The government?s subsidy for oil-based fuel is estimated lower this year compared to the initial target due to the decline in consumption, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Wednesday.

In a hearing with the House of Representatives? Commission VII which among others oversees energy affairs, Purnomo said the realized subsidy for the fuel was estimated at Rp 59.581 trillion this year, slightly lower than the state budget?s initial projection of Rp 60.164 trillion.

?The lower-than-expected realized subsidy will be caused by a decline in the consumption of certain types of fuel, particularly diesel,? Purnomo said.

The state budget has estimated the public?s consumption of subsidized fuel (Premium gasoline, kerosene and diesel oil) at 41.578 million kiloliters this year. As of the end of May this year, the total consumption stood at 14.712 million kiloliters or 35 percent of the annual projection. Meanwhile, the fuel subsidy spent by the government totaled Rp 16.9 trillion or about 28 percent of the total projection for this year.

The government, in the state budget, initially projected the Indonesian crude price (ICP) would average at $57 per barrel this year. In view of the market trend, the government has upped the ICP assumption to $62 per barrel in the revised state budget. The ICP, which is the average price of several types of crude oil produced in Indonesia, is normally between $2-$4 lower the West Texas Intermediate (WTI) crude?s prices

The government initially estimated the country?s oil output and lifting for this year at 1.1 million and 1.05 million barrels per day. In the revised state budget, the government has revised the oil output and lifting targets to 1.05 million and 1 million barrels per day, according to Purnomo.

Also during the meeting, the minister said the government?s subsidy for power consumption was projected to sharply increase to Rp 31.246 trillion this year, from the state budget?s allocation of Rp 16.9 trillion, as state owned electricity firm PT PLN was not allowed to increase its selling prices this year.

The government has told PLN to keep its prices unchanged this year on fear such increases would further boost inflation that had dramatically increased following the government?s decision to increase fuel prices last year.

Purnomo said the government has provided PLN with more cash to ease the firm?s financial difficulties. (Godang)