Govt cuts Premium's price, but prospect of diesel price cut remains uncertain

The government?s decision to cut the price of subsidized Premium gasoline by Rp 500 to Rp 5,500 (1 US$= Rp 11,950) per liter begins effective today, but it is still uncertain whether the government will also lower the price of subsidized diesel oil as promised by Minister of Energy and Mineral Resources Purnomo Yusgiantoro recently.

Pertamina?s deputy president for corporate communication Anang R. Noor said that the new price which began effective shortly after the midnight on Sunday was expected to push up demand for Premium as motorists would likely raise their fuel purchases to benefit from the price cut.

?To anticipate the higher demand, Pertamina will raise the supply of Premium by 10 percent from the average daily demand of about 50,000 kiloliters,? he said in Jakarta on Sunday. ?It means that we will raise the daily supply by about 5,000 kiloliters,? he added.

In line with the drop in international crude prices, the government decided last month to cut the price of Premium by Rp 500 to Rp 5,500 beginning Dec. 1. However, the government maintained the price of diesel at Rp 5,500 even though the market price of the fuel has also showed a significant decline.

The chairman of the Indonesian Chamber of Commerce and Industry (Kadin), M.S. Hidayat, called on Minister of Energy and Mineral Resources Purnomo Yusgiantoro to also lower the price of diesel by Rp 500 per liter to help cut the spending of the users of the fuel, mostly transportation companies.

With regard to Kadin?s request, the minister has said that it is difficult to cut the price of the diesel oil as much as that made on Premium. He said the government was considering lowering the price of diesel by Rp 300 per liter, but it remains uncertain when the price cut will be made. (*)