Govt allocates another Rp 42.40 trillion for 2004 fuel subsidy

The government has added another Rp 42.40 trillion to the 2004 fuel subsidies following the jump in assumed oil price to US$34 from $22 per barrel in the revised 2004 State Budget, the Bisnis Indonesia newspaper reported in its Wednesday edition.

This was done to due to the surge in international crude prices, which touched $46 per barrel recently. With this, the total fuel subsidy for the year 2004 reached Rp 56.9 trillion

?We have used the price of $34 per barrel (in the revised 2004 State Budget) for the purchase of fuel. An amount of Rp 42.40 trillion has added to the fuel subsidy,? Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Monday after the press briefing on the 2005 draft state budget in Jakarta.

The change in the oil price will also affect the government?s budget deficit, which will likely reach Rp 1.91 trillion.

The state revenue from the oil will also be reduced to Rp 48.29 trillion from the projected amount of around Rp 57.1 trillion, which is based on the assumption that the exchange rate of Rp 8,700 per U.S. dollar and the national oil production of 1,072 barrels a day.

Purnomo said the oil price of $24 per barrel in the 2005 draft state budget is a conservative assumption because oil prices will may come down to around $30 per barrel level. (*)