Govt’s fuel subsidy to jump to Rp36 trillion for 2004

The size of fuel subsidy in the 2004 state budget is expected to jump to around Rp 36 trillion from the initial allocation of Rp 14.5 trillion due to the current soaring oil prices, the Kompas daily reported in its Tuesday edition.

The paper said that the average oil price during the year is assumed at around US$30 per barrel, compared to the $22 per barrel under the original 2004 state budget.

The higher figure in fuel subsidy was unveiled by president of state oil and gas firm PT Pertamina Ariffi Nawawi, and head of the House of Representatives budget committee Abdullah Zainie (although the latter did not provide specific figure).

Ariffi Nawawi said the government had spent Rp9 trillion fuel subsidy during the first quarter of 2004 itself.

The subsidy figure was based on the assumption of an exchange rate of Rp8,600 per U.S. dollar and the oil production of 1.125 million – 1.150 million barrels per day. The rupiah was traded at 9,120 per dollar (middle level exchange rate) on Monday.

Bank Indonesia fixed its exchange rate target of Rp8,200 to Rp8,700 in 2004.

Meanwhile, world oil prices reached $41.85 per barrel last week though Indonesian crude price was around $26-$30 per barrel.

Minister of Finance Boediono said Indonesia will not enjoy from higher oil prices because the price was fixed by the government for domestic consumption. (*)