Govt approves Pertamina?s request to increase LPG price

The government has approved the request of state-owned oil and gas firm PT Pertamina to increase the price of LPG in 12-kg container by between Rp 1,000-Rp 1,500 per kg, Coordinating Minister for the Economy Chairul Tanjung said on Monday.

He said, however, that the timing for the price hike will be made by Pertamina.

Pertamina in August made the proposed price increase as it has been selling the LPG in 12-kg container at a loss. Reports said that the real price of the 12-kg LPG is Rp 12,100 per kg, but to date, Pertamina has been selling the fuel at Rp 6,100 per kg, resulting in Rp 2.81 trillion of financial loss from the business during the first half of this year. Without a price hike, the loss is set to expand to Rp 5 trillion this year.

Pertamina Director for Marketing and Commercial Affairs, Hanung Budya declined to disclose the timing for the LPG price hike. ?We?ll discuss it first internally. For certain, we have been given the mandate (to increase price),? he was quoted as saying by Kontan.

The approval for the LPG price hike was made after the outgoing government of President Susilo Bambang Yudhoyono turned down an earlier suggestion including from President elect Joko Widodo to increase the price of subsidized fuel products amid concerns of ballooning fuel subsidy. (*)