Govt plans to increase quota for subsidized fuel

The government plans to increase the amount of subsidized fuel in the proposed state budget for 2007 by 5 percent or 1.90 million kiloliters (kl) to meet a projected increase in demand.

Energy and Mineral Resource Minister Purnomo Yusgiantoro said at a House of Representatives hearing Sunday the estimated increase in the fuel price subsidy was based on an increase in the economic growth forecast for 2007 to 6.2 percent from this year?s estimate of 5.8 percent.

?Projections on the consumption of subsidized fuel for 2007 will therefore be revised,? Purnomo said on Monday.

In the budget draft presented by President Susilo Bambang Yudhoyono to the House on Aug. 16, the quota for subsidized fuel was set at 37.9 million kl; consisting of 17 million kl of Premium gasoline, 11 million kl of diesel and 9.9 million kl of kerosene. The increase in the subsidy would push the total amount of subsidized fuel up to 39.80 million kl.

The head of downstream oil and gas regulatory agency BPH Migas, Tubagus Haryono, said the consumption of subsidized fuel was likely to increase to 39.80 million kl in 2007 due to the expected increases in consumption driven by higher economic growth.

It is estimated automobile sales will rise by 6 percent that year, he said.

Tubagas said that consumption for Premium gasoline was projected to increase by 2.71 percent to 17.46 million kl and diesel oil by 16.7 percent to 12.83 million kl while that of kerosene would decrease by 3.94 percent to 9.51 million kl.

Tubagus said the use of kerosene was projected to fall almost 4 percent in 2007 as more households began using coal briquettes and liquefied petroleum gas (LPG).

The government subsidizes the sales of Premium gasoline, kerosene and diesel used by motorists, households and small businesses. (godang)