Govt pledges not to further increase fuel prices next year

Chief Economic Minister Aburizal Bakrie has promised that the government would not increase fuel prices next year, if there is no extra-ordinary increase in the crude prices in the world, Bisnis Indonesia reported on Saturday

"With the fuel subsidy of about Rp 54.9 trillion to be allocated for the 2006 state budget, the government feels there will be no need to increase the fuel prices during the year," he added.

He, however, warned that if there is a sharp increase in the crude prices in the international market, the rise in the subsidy could not be avoided. "It means that if the subsidy is not raised, the fuel price should be raised," he said.

The House of Representatives' task force for state budget deliberation has agreed to reduce the fuel subsidy by about 40 percent to Rp 54.9 trillion in the 2006 state budget from about Rp 89.2 trillion at present.

Under the fuel subsidy arrangement, the subsidized fuel quota to be allocated next year would reach 41.578 million kiloliters, comprising of 17.08 kiloliters of Premium gasoline, 10 million kiloliters of kerosene and 14.498 kiloliters of diesel oil.

Chief economist at Cides Umar Juoro said that it would be difficult for the government to maintain the fuel prices at the present levels next year. "With the allocation of the fuel subsidy of about Rp 54.9 trillion in the 2006 state budget, it will be hard for the government not to increase fuel prices," he added. (*)