Govt mulls cutting prices of subsidized fuels

Government will study the possibility of cutting subsidized fuel prices if the downward trend in the world crude oil prices continues, says a senior official at the Energy and Mineral Resources Ministry.

Evita Legowo, Director General of Oil and Gas at the Energy and Mineral Resources Ministry said in Jakarta Friday that the government kept monitoring the global crude oil price that had shown a downward trend over the last several days.

?We will sit together to discuss the possibility of lowering the prices of subsidized fuels once the Indonesia Crude Price (ICP) has already passed below US$95 per barrel,? Evita said, adding that the ICP of $95 per barrel referred to the assumption of the oil price at this year?s amended state budged.

Meanwhile, Acting Coordinating Minister for Economy and Minister of Finance Sri Mulyani Indrawati said separately that it would be still difficult for the government to cut the prices of subsidized fuels despite the drop in world prices, given the large amount of the energy subsidy that had to be paid.

Moreover, she said, as cutting the fuel subsidy would require a revision in the state budget; it should receive a prior approval from the House of Representatives (DPR), which would take a long process.

The global crude oil price which reached US$147 per barrel on July 11, 2008 has shown a declining trend lately. It closed to psychological price limit at US$100 per barrel on Thursday. (*)