Government mulls increasing fuel price next year

The government may increase the price of subsidized gasoline and automotive diesel if crude price exceeds US$60 per barrel level.

?In early 2018, we?ll see. If crude price exceeds $60 per barrel, we may make adjustment to the fuel price,? said Director General of Oil and Gas at the Ministry of Energy and Mineral Resources, Ego Syahrial.

He, however, said that the fuel price hike will be the last resort as the government will consider other alternatives first such as improving efficiency at state-owned oil and gas firm PT Pertamina in a bid to help avoid increasing fuel price that would undermine people?s purchasing power. ?Can Pertamina overhead be made more efficient?? he said.

Crude price has started to gradually increase since the start of this year, currently reaching around $58 per barrel. The government has previously determined not to increase the price of Premium gasoline and subsidized automotive diesel until end of next year.

State-owned oil and gas firm PT Pertamina has complained that the two fuel products have created heavy financial burden to the company as it has been forced to sell them at prices lower than their real economic value.

PT Pertamina booked a net profit of US$1.99 billion in the first nine months of this year, which is a nearly 30 percent drop compared to $2.83 billion in the same January-September period of last year despite higher revenue.

Pertamina President Director Elia Massa Manik said in November that the company?s finances have been burdened with the obligation to distribute certain fuel products across the country whose prices are administered by the government and has not been increased despite rising crude price. He said that Pertamina has provided subsidy of around $1.42 billion for the administered fuel products sold to consumers at prices below its real economic price.

Editing by Reiner Simanjuntak