Fuel subsidy may swell to Rp 60 trillion this year

The government's fuel subsidy may reach Rp 60 trillion this year, surpassing the Rp 54.3 trillion allocated in the 2006 state budget as a result of an increase in the crude oil prices in the international market, a senior executive of state owned oil and gas company Pertamina has estimated.

Djaelani Sutomo, the head of Pertamina's division for fuel sales, said in Jakarta Thursday that although the sales of subsidized fuels would only reach about 97 percent of the existing quota, the government's subsidy may increase above Rp 54.3 trillion allocated in the state budget.

"With the increase in the crude oil price, the fuel subsidy will obviously exceed the target," he said.

The government has allocated fuel subsidy of about Rp 54.3 trillion in 2006 state budget, with oil price assumption of about US$57 per barrel. However, the continued increase in fuel prices which last week rose to a new high at $70 per barrel will certainly result in the surge of the government's fuel subsidy.

Djaelani estimated that the crude oil prices might further increase to $75 per barrel within the next few months, posing another pressure to the government's subsidy allocation.

Pertamina has estimated that its fuel imports would reach about 7.3 million barrels per month this year. In April, the fuel imports might, however, exceeded the target to reach 7.4 million barrels due to a technical problem at Pertamina's refinery plant in Dumai. (Godang)