Govt to phase out oil subsidies until 2003: Minister

In an effort to restructure the oil and gas sector, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the government will go ahead with its plan to phase out oil subsidies until 2003.

Unless the government phased out the oil subsidies, it would face a shortage of funds to finance education and poverty eradication programs which had so far received limited budget allocations, he told a seminar on oil and gas industry here at the weekend.

Actually, the oil subsidies were aimed at helping the people in the low income bracket, but in practice the subsidies had gone to the affluent society, he said.

He said nearly 75 percent of fuel oil consumers in the transportation sector was private cars which did not give value added and that the subsidies in the sector were waste of the government funds.

Even most consumers of kerosene which received the greatest portion of subsidies were industries which were not entitled to such subsidies, he said.

He said the government this year provided Rp37 trillion in oil subsidies, accounting for more than 50 percent of receipts from crude exports. (*)