Govt cuts volume of subsidized fuels in 2009 state budget

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that the government has decided to slice the volume of subsidized fuels to 36.8 million kiloliters for the proposed 2009 state budget from the current 38.8 million kiloliters, Bisnis Indonesia reported Saturday.

Purnomo said in Jakarta Friday that the two million kiloliter-cut in the subsidized fuel volume next year would be possible because the use of the subsidized kerosene had declined significantly thanks to the government?s kerosene to liquefied petroleum (LPG) conversion program.

?The program to shift the use of kerosene into LPG has run well, which has led to the declining trend in the use of the subsidized fuels,? he said.

Apart from the kerosene to LPG conversion program, the use of alternative fuels, such as biofuel and bioethanol had also contributed to the decline in the subsidized gasoline, Purnomo said.

In addition to such an encouraging development, the government had also encouraged state-owned electricity company to use coal for its power plants, especially those currently being built, he added.

?A number of power plants currently being built as part the government?s crash program to provide additional power supply of 10,000 MW will all use coal as its fuel,? he said.

Meanwhile, Minister of Finance Sri Mulyani Indrawati underscored the importance of cutting the volume of subsidized fuels, saying with fuel consumption of 1 million kiloliters of fuels per day, the state budget would likely suffer deficit of Rp1.6 trillion.

The minister also said that the oil lifting in 2009 was expected to reach 950,000 barrels per day.

Sri added that the energy subsidies, especially in electricity and fuels, for the 2009 state budget totaled Rp161.8 trillion. Out of the total figures, Rp101.4 trillion was allocated for fuel subsidy and Rp 60.4 trillion for power subsidy, she said. (*)