Government raises fuel price
Wednesday, January 16 2002 - 06:25 PM WIB
The measure, which was approved by the House of Representatives last year, aims to reduce the government?s fuel subsidy this year, which is projected to reach Rp 41.9 trillion this year unless the fuel prices are not raised.
Following the fuel price increases, the fuel subsidy to be covered by the government this year would drop by Rp 11.5 trillion to Rp 30.4 trillion, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said Wednesday evening while announcing the new fuel prices.
The government has several times unveiled the plan to raise the fuel prices but many people have doubted that the government would realize the plan given the strong protests from the public against the plan.
Raising fuel prices is part of the agreement between the government and the International Monetary Fund (IMF), which has been providing financial assistance to Indonesia and is strongly opposed to the subsidy scheme, which it says puts too much burdens on the government?s budget and mostly benefits the rich people.
The main feature of the government?s fuel pricing policy announced Wednesday evening is that fuel prices will be adjusted to the international price.
The government will apply the new fuel prices in two phases, that for the period starting today until the end of February and for the period starting March 1, this year.
In the first phase, prices for most of fuel types will reach 75 percent of international prices, except for the Premium gasoline, which will be sold starting today at international price.
Starting March 1, prices for all types of fuel will adjusted to international prices.
The government however will continue to provide a significant subsidy for kerosene, which is mostly consumed by low-income households and small businesses.
Under the new pricing scheme effective today, the Premium gasoline at gas stations will be sold at Rp 1,550 (about 6.7 US cents) per liter as against Rp 1,450 previously. The price for automotive diesel oil , industrial diesel oil and fuel oil have been raised to Rp 1,150, Rp 1,110 and Rp 925 per liter respectively. Previously, automotive diesel oil was sold Rp 9,00 per liter, while prices for the industrial diesel oil and fuel oil were set at 50 percent of the international prices.
New price for kerosene for households and small businesses is Rp 600 per liter, as against Rp 500 previously. The price is higher at Rp 1,230 per liter for industrial customers.
Purnomo noted however that all types of fuel would be sold at international prices for mining companies and oil and gas companies.
The new prices include a 10 percent value added tax.
Purnomo said starting March 1, fuel prices will be changed every month depending on the prices on the international market.
The government however has set the floor prices and ceiling prices for each type of fuel to prevent the prices from wildly fluctuating in case of sharp drop and increase in oil prices.
The floor price for the Premium gasoline is Rp 1,450 per liter, while its ceiling price is Rp 1,750 per liter.
The floor price for kerosene for industrial users is Rp 900 per liter, while its ceiling price is Rp 1,650 per liter.
The floor prices for automotive diesel oil, industrial diesel oil and fuel oil are set at Rp 900, Rp 900 and Rp 800 per liter respectively, while their respective ceiling prices are Rp 1,550, Rp 1,520 and Rp 1,150 per liter. (Bodega)